Question - Sarah Crowly uses the cash receipts method of accounting for her accounting business. On December 25, 2011, she received a $1,000 check in payment for her services. The following year she was told that the check had bounced. One client offered to give her a check for $500 on December 31, 2011, but Sarah asked him to give it to her the next year, which the client did. Another client gave her a check for $750 on December 31, 2011, but after the bank had closed. Both the $500 and $750 checks cleared the next year.
How much does Sarah have to include in her gross income for 2011?