Ted works as a painter for local businesses on weekends, and he often provides services in exchange for property. In 2018, Ted provided painting services in exchange for $1,275 of car repair services, $3,570 of groceries, and a certificate of deposit (CD) for $4,050. The (CD) matures next year with interest. Finally, Ted received a gift card that can only be applied for $850 of clothing at a local mall. Ted has only applied the gift card to purchase $100 of clothing. Compute Ted's 2018 gross income assuming that he uses the cash basis of accounting.

According with the information, you should sum all the numbers mentioned, with the exception of the $.4050 of the (CD) and make another operation. The reason is the methodology of cash basis of accounting, with this type of methodology where you suppose that every income that you receive independently must be available immediately, in this case the $1,275 of car repair services, $3,570 of groceries, and the $100 were resources that you already used, it means that you make effective gross income of $4.945. Remain the $750 of the clothing that you still haven't used and the $4.050 of the certificate of deposit that will be effective (cash) the next year.