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Exercise 16-29 (LO. 2) In 2021, Chaya Corporation, an accrual basis, calendar year taxpayer, provided services to clients and earned $25,000. The clients signed notes receivable to Chaya that have a fair market value of $22,000 at year-end. In addition, Chaya sold a 36-month service contract on June 1, 2021, and received payment in full of $12,000. Round any division to four decimal places. If required, round your final answer to the nearest dollar. How much gross income does Chaya report from these transactions in 2021? 1. From the services to clients: $ 2. From the service contract: s

Sagot :

Gross Income of Chaya from these transactions will be $27,333

Amount earned = $25,000

Amount received = $12,000

Using accrual method of accounting, income and expenses are recognized as it is being made or earned irrespective of the amount of cash paid or received.

Fair market value = payment received * 7/36

= $12,000 * 7/ 36

= $2333.333

Chaya reported income = amount earned + fair market value

= $25,000 + $2333.333

= $27,333.

Know more about accrual method of accounting - https://brainly.com/question/16161644

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