For 2021, Essence Company, a calendar year taxpayer, will change from the cash method for tax purposes

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For 2021, Essence Company, a calendar year taxpayer, will change from the cash method for tax purposes to the accrual method. At the end of 2020, Essence showed the following items.

Accounts receivable $200,000

Accounts payable 135,000

Bank loan 100,000

What is the § 481(a) adjustment for this change in accounting method? Be sure to state whether it is positive or negative.

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South-Western Federal Taxation 2022 Individual Income Taxes

ISBN: 9780357519073

45th Edition

Authors: James C. Young, Annette Nellen, William A. Raabe, Mark Persellin, William H. Hoffman

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Question Posted: Jul 15, 2022 05:39 AM

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For 2021, Essence Company, a calendar year taxpayer, will change from the cash method for tax purposes

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ANSWER Accounts payable will be treate...View the full answer

South-Western Federal Taxation 2022 Individual Income Taxes

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