Dustin has a contract to provide services to Dado Enterprises. In November of ye
ID: 2424535 • Letter: D
Question
Dustin has a contract to provide services to Dado Enterprises. In November of year 0, Dustin billed Dado $10,000 for the services he rendered during the year. Dado is an accrual-method proprietorship that is owned and operated by Dustin’s father
a.
What amount of revenue must Dustin recognize in year 0 if Dustin uses the cash method and Dado remits payment for the services in December of year 0? What amount can Dado deduct in year 0?
b.What amount of revenue must Dustin recognize in year 0 if Dustin uses the accrual method and Dado remits payment for the services in December of year 0? What amount can Dado deduct in year 0?
c.What amount of revenue must Dustin recognize in year 0 if Dustin uses the cash method and Dado remits payment for the services in January of year 1? What amount can Dado deduct in year 0?
d.
What amount of revenue must Dustin recognize in year 0 if Dustin uses the accrual method and Dado remits payment for the services in January of year 1? What amount can Dado deduct in year 0?
What amount of revenue must Dustin recognize in year 0 if Dustin uses the cash method and Dado remits payment for the services in December of year 0? What amount can Dado deduct in year 0?
b.What amount of revenue must Dustin recognize in year 0 if Dustin uses the accrual method and Dado remits payment for the services in December of year 0? What amount can Dado deduct in year 0?
c.What amount of revenue must Dustin recognize in year 0 if Dustin uses the cash method and Dado remits payment for the services in January of year 1? What amount can Dado deduct in year 0?
d.
What amount of revenue must Dustin recognize in year 0 if Dustin uses the accrual method and Dado remits payment for the services in January of year 1? What amount can Dado deduct in year 0?
Explanation / Answer
a) Dustin recognise the revenue of $ 10000 becuase he receives the payment for the services in year 0. No amount deducted by Dado in year 0.
b) If accrual method used by Dustin but he recognise the revenue of $10000 in year 0. becuase he received the payment in December for services rendered in year 0. No amount deducted by Dado in year 0.
c) Dustin will not recognise the revenue becuase he receives the payment in next year 1. and becuase he follows cash method. no amount deducted by Dado in year 0.
d) Dustin recognise $ 10000 becuase he earns the income in year 0 due to follow of accrual method. $10000 will be deducted by Dado in year 0.
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