Jill is having an awesome year in her dress repair business! She\'s made over $4

Question

Jill is having an awesome year in her dress repair business! She's made over $45,000 profit through September and it looks like it will continue through the end of the year. Last year you recall she only made $30,000 in cash profit that we reported on the return for the whole year. What can we do to reduce this year's profit? I know we will be able to take a bad debt write off of $20,000 contract that she billed but never got paid on but what else can we do? Also, she has a lot of bills to pay for the business but right now cash is a little tight because we bought the new sewing machine for $10,000. Is there any other way we can reduce the income?

Explanation / Answer

Expenditures like salaries, printing and stationery, travelling ad coveyances, telephone charges can be applied on accrual basis without incurring cash flow.

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