For each of the following situations, determine the proper year for recognition of the income or…

For each of the following situations, determine the proper
year for recognition of the income or deduction if the taxpayer is (1) a cash
basis taxpayer and (2) an accrual basis taxpayer:

a. Helen fixes Mark’s plumbing in November 2010. Mark
receives the bill in December 2010 but does not pay Helen until January 2011.

b. The Outback Brewing Company purchases a new delivery van
on October 30, 2010. The purchase is financed with a note that will be paid off
over 3 years. Outback expects to use the van for 3 years, but the tax life of
the van is 5 years.

c. Morbid Marble Mortuaries, Inc.,
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For each of the following situations, determine the proper
year for recognition of the income or deduction if the taxpayer is (1) a cash
basis taxpayer and (2) an accrual basis taxpayer:

a. Helen fixes Mark’s plumbing in November 2010. Mark
receives the bill in December 2010 but does not pay Helen until January 2011.

b. The Outback Brewing Company purchases a new delivery van
on October 30, 2010. The purchase is financed with a note that will be paid off
over 3 years. Outback expects to use the van for 3 years, but the tax life of
the van is 5 years.

c. Morbid Marble Mortuaries, Inc., sells a headstone to
Lorissa for $6,000. The terms of the sale call for Lorissa to pay $3,000 in the
year of the sale and $1,000 in each of the succeeding 3 years.

d. Maury’s Computer Consultants, Inc., performs work for
Janis in 2010. Maury’s bills Janis in 2010, but no payment is received. In 2011,
Janis files for bankruptcy, and Maury’s determines that it will be able to
collect nothing on her account.

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