In: Accounting
In October of the current year, Jasmine received a $15,520 payment from a client for 32 months of rent. The rental period begins on September 1 of this year. This amounts to $485 per month. Jasmine is a calendar-year taxpayer.
What amount of the $15,520 payment, if any, must Jasmine recognize this year if she uses the accrual method of accounting?
Numeric Response ?
CALCULTION OF MONTHLY RENT EXPENSES | |||||
Working Notes: | Total Amount received | $ 15,520 | |||
Divide By | "/" By | ||||
No of Months Payment | $ 32 | ||||
Monthly Rent | $ 485 | ||||
Solution: | |||||
Calculation of Rent expenses recognize in the current year | |||||
As per accrual basis of accounting | |||||
Monthly Rent = | $ 485 | ||||
No. of Months Expired in calendar Year ( Sept To December) | 4 | Months | |||
Rent Recognized = Monthly Rent X No. of Months Expired | |||||
Rent Recognized = | $ 485 | "X" | 4 | Months | |
Rent Recognized = | $ 1,940 | ||||
Answer = $ 1,940 | |||||