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?
CALCULTION OF MONTHLY RENT REVENUE | ||||
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 in this year = | Monthly Rent | "X" | No. of Months | |
Rent Recognized in this year = | $ 485 | "X" | 4 | |
Rent Recognized in this year = | $ 1,940 | |||
Answer = $ 1,940 | ||||