Alex is a calendar year sole proprietor. He began business on December 1, this year. He uses the accrual method of accounting. Alex had the following collections in December.
Collected $7,000 in December, from clients who paid cash for services to be performed next year.
Collected $5,000 in December, for services performed during December; deposited in an operating account on December 31, this year.
Collected $12,000 in December; on accounts receivable for services performed in December; deposited in operating account on January 2, next year.
What is the amount Alex must include in his income for December?
A) $7,000
B) $12,000
C) $17,000
D) $24,000
Answer: C
Tax
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