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SHORT ANSWERS/PROBLEMSProblem I (4 Points)Zoltar, Inc. is a calendar year C corporation with $12.5 million of annual grossreceipts the past five years. It has been using the cash method of accounting.As of December 31, 2016, it had $1.6 million of accounts receivable ($1.3 millionfrom 2016, $100,000 from 2015, $150,000 from 2014, and $50,000 from 2013)for services rendered through such date but not yet collected and $400,000 ofaccounts payable for expenses incurred in 2016 but not yet paid. Zoltar wishesto change its overall method of accounting to the accrual basis beginning with the2017 tax year. The company is not under examination and has not beencontacted by the IRS regarding the examination of the 2016 taxable year.A. What is the amount of the $481(a) adjustment? Will it increase ordecrease taxable income in the year of change?B. When will the $481(a) adjustment be recognized if Zoltar voluntarilyfiles for a change in accounting method before being contacted by the IRS?C. When will the $481(a) adjustment be recognized if the IRS notifiesZoltar that 2016 is under audit before the voluntary change is filed?D. What other factors should Zoltar consider regarding the filing of arequest for a voluntary change in accounting method vs. waiting for the IRS tonotify it?