Problem $5-50($LO $5-2)($Algo$)$

$[$The following information applies to the questions displayed below.$]$

Ralph owns a building that he is trying to lease. Ralph is a calendar$-$year, cash$-$method taxpayer and is trying to evaluate the tax consequences of three different lease arrangements. Under lease $1,$ the building rents for $$540$ per month, payable on the first of the next month, and the tenant must make a $$540$ security deposit that is refunded at the end of the lease. Under lease $2,$ the building rents for $$5,940$ per year, payable at the time the lease is signed, but no security deposit is required. Under lease $3,$ the building rents for $$540$ per month, payable at the beginning of each month, and the tenant must pay a security deposit of $$1,080$ that is to be applied toward the rent for the last two months of the lease.

Note: Leave no answers blank. Enter zero if applicable.

Problem $5-50$ Part a $($Algo$)$

a$.$ What amounts are included in Ralph's gross income this year if a tenant signs lease $1$ on December $1$ and makes timely payments under that lease?

Amount included in Gross Income