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D Question 7 Tin At 43 10 pts Recordings 65 (10 points) Techforce Corporation, a small accrual basis taxpayer that uses the calendar year as its tax year sells computer programming and coding courses under contracts ranging from 3 months to 2 years

Accounting Jan 21, 2021

D Question 7 Tin At 43 10 pts Recordings 65 (10 points) Techforce Corporation, a small accrual basis taxpayer that uses the calendar year as its tax year sells computer programming and coding courses under contracts ranging from 3 months to 2 years. In August 2020, Techforce sells three month contracts for $30.000, one-year contracts for $90,000, and two-year contracts for $220,000. Each of the contracts sold provides that services will start on August 1, 2020. If Techforce wants to defer its service income as much as possible, how much must it include in income in 2020, 2021, and/or any later years? Drive Upload Choose a File « Previous

Expert Solution

Statement Showing Income

Incomes 2020 2021 2022
       
Three Months Contracts 30000 - -
One Year Contract 37500 52500 -
Two Year Contract 45833 110000 64167
       
Total Income 113333 162500 64167
       

Working Notes

The calender month is from January to December.

Three Month Contract

2020 = 30000

One Year Contract

2020 = From Augest to December = (90000 X 5/12 ) = 37500

2021 = From January to July = ( 90000 X 7/12 ) = 52500

Two Year Contract

2020 = From Augest to December = ( 220000 X 5/24) = 45833

2021 = From January to December = ( 220000 X 12/24 ) = 110000

2022 = From January to July = ( 220000 X 7/24 ) = 64167

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