Chicago Cleaning Services Provides Nightly Janitorial Services at a Monthly

Chicago Cleaning Services provides nightly janitorial services at a monthly rate of $300. Customers have three payment options:
If Chicago Cleaning is a cash basis taxpayer:
$\begin{array}{lr}\text { Month-by-month payments } & \$ 300 \\\text { One year advance payment } & 3,360(\$ 280 \text { per month }) \\\text { Two year advance payment } & 6,480(\$ 270 \text { per month }) \end{array}$

I.All cash payments are taxable when they are received.
II.One-year advance payments may be deferred: $280 would be included in income for each month of service provided.
?

A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements are correct.
D) Neither statement is correct.

Correct Answer:

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