1- Turner, a successful executive, is negotiating a compensation plan with his potential employer. The employer has offered to pay Turner a $600,000 annual salary, payable at the rate of $50,000 per month. Turner counteroffers to receive a monthly salary of $40,000 ($480,000 annually) and a $180,000 bonus in five years when Turner will be age 65.

a. If the employer accepts Turners counteroffer, Turner will recognize $660,000 at the time the offer is accepted.

b. If the employer accepts Turners counteroffer, Turner will recognize as gross income $55,000 per month [($480,000 + $180,000)/12].

c. If the employer accepts Turners counteroffer, Turner will recognize $40,000 income each month for the year and $180,000 in year 5.

d. If the employer accepts Turners counteroffer, Turner must recognize imputed interest income on the $180,000 to be received in five years.

e. None of these.

2- Office Palace, Inc., leased an all-in one printer to a new customer, Ashley, on December 27, 2019. The printer was to rent for $600 per month for a period of 36 months beginning January 1, 2020. Ashley was required to pay the first and last months rent at the time the lease was signed. Ashley was also required to pay a $1,500 damage deposit. Office Palace must recognize as income for the lease:

a. $0 in 2019, if Office Palace is an accrual basis taxpayer.

b. $7,800 in 2020, if Office Palace is a cash basis taxpayer.

c. $2,700 in 2019, if Office Palace is a cash or accrual basis taxpayer.

d. $1,200 in 2019, if Office Palace is a cash or accrual basis taxpayer.

e. None of these.

3- Orange Cable TV Company, an accrual basis taxpayer, allows its customers to pay by the year in advance ($600 per year) or two years in advance ($960). In September 2019, the company collected the following amounts applicable to future services: October 2019-September 2021 services (200 two-year contracts) $192,000 October 2019-September 2020 services (200 one-year contracts) 120,000 As a result of this, Orange Cable should report as gross income for 2020:

a. $54,000.

b. $78,000.

c. $258,000.

d. $312,000.

e. None of these.

Please answer all 3. question. Thank you very much in advance.