Question

Saved Bryan followed in his father's footsteps and entered into the carpet business. He owns and operates I Do Carpet (DC). Bryan prefers t install carpet only, but in order to earn additional revenue, he also cleans carpets and sells carpet-cleaning supplies. a. IDC contracted with a homebuilder in December of last year to install carpet in 10 new homes being built. The contract price of $88,000 includes $53,200 for materials (carpet). The remaining $34,800 is for IDC's service of installing the carpet. The contract also stated that all money was to be paid up front. The homebuilder paid IDC in full on December 28 of last year. The contract required IDC to complete the work by January 31 of this year. Bryan purchased the necessary carpet on January 2 and began working on the first home January 4. He completed the last home on January 27 of this year. b. IDC entered into several other contracts this year and completed the work before year-end. The work cost $162,000 in materials. Bryan billed out $243,200 but only collected $220,000 by year-end. Of the $23,200 still owed to him, Bryan wrote off $3,800 he didn't expect to collect as a bad debt from a customer experiencing extreme financial difficulties. c. IDC entered into a three-year contract to clean the carpets of an office building. The contract specified that IDC woulc clean the carpets monthly from July 1 of this year through June 30 three years hence. IDC received payment in full of $9,216 ($256 a month for 36 months) on June 30 of this year. d. IDC sold 100 bottles of carpet stain remover this year for $5 per bottle (it collected $500). IDC sold 40 bottles on June 1 and 60 bottles on November 2. IDC had the following carpet-cleaning supplies on hand for this year and it uses the LIFO method of accounting for inventory under a perpetual inventory system: Bottles 40 Purchase Date November last year February this year July this year August this year Totals 35 25 40 Total Cost $248 176 165 300 140 $889

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that's all the information that I send

Answer 1

		Nature	Cash method	Accrual method
a	Prepaid carpeting services	Revenue	0	88000
a	Carpet supplies	Cost of goods sold	53200	53200
b	Carpeting services	Revenue	220000	243200
b	Materials needed for contracts	Cost of goods sold	162000	162000
b	Bad debt	Other deductions	0	3800
c	Cleaning services	Revenue	9216 (256*36)	1536 (256*6)
d	Stain remover sales	Revenue	500	500
d	Stain remover	Cost of goods sold	641	639 (176+(248/40*5))+(300+(165/25*20))
e	Prepaid rent	Other deductions	1860	775 (1860/12*5)
f	Prepaid paint job	Other deductions	820	820
g	Compensation to Aiden	Other deductions	0	0
h	Prepaid interest	Other deductions	1680 (4200/5*2)	1680
	Total Deductions		4360	7075
	Taxable income		9515	110322