Acton Design Group is an incorporated architectural firm that began operations on January 1, 2007. It reports to its shareholders on the accrual basis, but to the Internal Revenue Service on the cash basis. Following is a schedule of its 2007-2010 revenues, expenses, receipts, and disbursements. For each year shown, calculate the company's income tax payment and income tax expense (provision for income taxes). Assume that in all four years the effective tax rate was 30 percent.

Based on your calculations, do you feel the company was wise in using the cash basis for its tax returns? Explain.

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2007 2008 2009 Revenues Expenses Receipts Disbursements $456,000 270,000 336,000 288,000 $696,000 672,000 636,000 528,000 5840,000 798,000 894,000 750,000 2010 $780,000 618,000 690,000 606,000