(TCO 7) Karen, an accrual basis taxpayer, sold goods in October 2011 for $10,000

Question

(TCO 7) Karen, an accrual basis taxpayer, sold goods in October 2011 for $10,000. The customer was unable to pay cash, so the customer gave Karen a note for $10,000 that was payable in April 2012. The note bore interest at the federal rate. The fair market value of the note at the end of 2011 was $9,000. Karen collected $10,000 from the customer in April 2012. Under the accrual method: A. Karen must recognize $10,000 of income in 2011. B. Karen must recognize $9,000 of income in 2011. C. Karen must recognize $10,000 of income in 2012. D. Karen must recognize $1,000 of income in 2012. E. None of the above

Explanation / Answer

the righ choice for this question is A)Karen must recognize 10000 od income in 2011

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