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In: Accounting

Malo Inc. uses a fiscal year ending June 30. On May 29, Malo received a check...

Malo Inc. uses a fiscal year ending June 30. On May 29, Malo received a check for $3,900 from a business that leases parking spaces in Malo’s parking garage. This payment was for the three-month period beginning June 1. On June 15, Malo sent an invoice for $5,500 to a customer for services rendered during May and June. Malo received payment from the customer on July 3.

If Malo is a cash basis taxpayer, how much income should it recognize from the given transactions in the current fiscal year?

If Malo is an accrual basis taxpayer, how much income should it recognize from the given transactions in the current fiscal yea

Solutions

Expert Solution

  1. Income to be recognized under cash basis = $3900                                                                                                                          
  2. Income to be recognized under accrual basis = (3900/3*1) +5500 = 6800                                

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Hope that helps.

Feel free to comment if you need further assistance J

ekkarill92 answered 1 year ago
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