XYZ Manufacturing, Inc, located in Centervale, uses the calendar year and the cash method of accounting

On December 31, 2010, XYZ made the following cash payments: $100,000 for a two-year office lease beginning on February 1, 2011 $58,000 of inventory items held for sale to customers $21,800 to purchase new manufacturing equipment, which was delivered and set up on January 15, 2011 $10,000 compensation to the company’s auditors who spent three weeks in January 2011 analyzing XYZ’s internal control system, as a part of the annual audit $30,500 property tax paid to the local government for the first six months of 2011

Respond to the following: To what extent can XYZ deduct these payments in 2010? Explain your answer citing relevant rules and laws What advantages does the cash method of accounting offer to the company? Give reasons for your answer Would any other method offer an advantage? Give reasons for your answer