Question

bill operates a proprietorship using the cash method of accounting, and this year he received the following: $270 in cash from a customer for services rendered this year a promise from a customer to pay $166 for services rendered this year tickets to a football game worth $165 as payment for services performed last year a check for $204 for services rendered this year that bill forgot to cash how much income should bill realize on schedule c?

Answer 1

Bill should report a total income of $639 on Schedule C, which includes cash received for services rendered, the value of football game tickets received, and a check that he forgot to cash but had constructive receipt of.

Step-by-step explanation:

When determining the income to be reported on Schedule C for a cash-based taxpayer like Bill, one must include all the cash, checks, and property received during the taxable year for services rendered. By employing the cash method of accounting, only transactions that involve actual or constructive receipt of cash or cash equivalents in the taxable year are recognized as income.

• Bill received $270 in cash for services rendered this year.
• He received a promise to pay, which is not recognized until actual payment is received, so the $166 is not included.
• The tickets to a football game worth $165, even if for services performed last year, are included as income this year because they were received this year.
• The check for $204 which was not cashed is still included as income, as Bill had constructive receipt of income when the check was provided.

Therefore, the income Bill would report on Schedule C is $639 ($270 + $165 + $204).