Marr Corp. reported rental revenue of $2,210,000 in its cash basis federal income tax return for the year ended November 30, 2006. Additional information is as follows:
Rents receivable - November 30, 2006 $1,060,000
Rents receivable - November 30, 2005 $800,000
Uncollectible rents written off during the fiscal year $30,000
Under the accrual basis, Marr should report rental revenue of?
The answer I got is $2,440,000 because:
260,000 + 2,110,000 - 30000 = $2,440,000
260,000 is the decrease in Rents Receivables.
But, the book's answer is different and it doesn't show how it got the answer.
Rent Receivable increased 260,000, not decreased.
BB + Rental Revenue Earned - Collections - Write offs = EB
800 + ? - 2,210 - 30 = 1,060
Revenue Earned = 2,500,000