On October 1, Bender Company (a calendar-year, cash-basis taxpayer) signs a lease with Realco Corporation to rent

Question:

On October 1, Bender Company (a calendar-year, cash-basis taxpayer) signs a lease with Realco to rent office space for 36 months. Bender obtains favorable monthly payments of $600 by agreeing to prepay the rent for the entire 36-month period.
a. If Bender Company pays the entire $21,600 on October 1, how much can it deduct in the current year?
b. Assume the same facts above except that the lease requires Bender Company to make three annual payments of $7,200 each on October 1 of each year for the next 12 months rent. On October 1 of the current year, Bender Company pays $7,200 for the first 12-month rental period. How much can Bender Company deduct in the current year?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...