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Self$-$Study Problem $6\mathrm{.}2$A

Melaleuca, Inc., is an accrual$-$basis taxpayer with the following transactions during the calendar tax year

Accrual business income $($except rent and interest$)$

$$63,000$

Accrual business expenses $($except rent$)$

$42,000$

Three months' rent received on a leased building on November $1$ of this year

Prepaid interest for one year received on a note on July $1$ of the current year

$9,000$

$12,000$

Six months' rent paid on December $1$ for business property

$7,200$

Calculate Melaleuca, Inc.$\text{'}$s$,$ net income for this year.

$$

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The tax law requires taxpayers to report taxable income using the method of accounting regularly us method clearly reflects the taxpayer's income. The cash receipts and disbursements $($cash$)$ method, methods specifically recognized in the tax law.

The accrual method of accounting requires that income be recognized when $(1)$ all events have occur amount of income can be estimated with reasonable accuracy. An expense is deductible in the year in exists and the amount can be estimated with reasonable accuracy.

For this problem, consider what items required adjustment.

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