This year, Yuan started a business selling computer parts both in store and online.He purchased $60,000 of goods during the year via credit card.His ending inventory was $9,000.For tax purposes, Yuan adopted the cash method and the treatment of inventory as deductible when purchased per his books.His deduction for inventory for the year is:
A)$51,000.
B)$60,000.
C)$69,000.
D)None of these.

Question

Quizplus · Accepted Answer

Since Yuan adopted the treatment of inventory as deductible when purchased per his books, the deduction for the year would be the total amount of inventory purchased during the year, which is $60,000. The ending inventory of $9,000 would not affect the deduction since it is a balance sheet item and not an expense. Therefore, the correct option is B.

This Year, Yuan Started a Business Selling Computer Parts Both