Maria earns $50,000 from consulting contracts during the year. She collects only $48,000 from her clients and expects the $2,000 will remain uncollectible.
a. If Maria's business is on the accrual basis, what is her gross income for the year and how much can she deduct for bad debt expense?
b. If Maria's business is on the cash basis, what is her gross income for the year and how much can she deduct for bad debt expense?