Under the accrual basis, Marr should report rental revenue of?

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.

1 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

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