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38. Falcon, Inc., paid salaries of $500,000 to its employees during its first year of operations. At the end of the year, Falcon had unpaid salaries of $45,000.

a. Calculate the salary deduction if Falcon is a cash basis taxpayer.
b. Calculate the salary deduction if Falcon is an accrual basis taxpayer.

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Solution Summary

For one finance question, this solution calculates the salary deduction if Falcon is a cash basis taxpayer. It also calculates the salary deduction if Falcon is an accrual basis taxpayer.

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38. a. Under the cash method, Falcon can deduct only the salaries paid of $500,000. The $45,000 of unpaid salaries can be deducted ...

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