Response to the following problem:
On April 1 Ivy Corp. began operating a service company with an initial cash investment by shareholders of $1,000,000. The company provided $3,200,000 of services in April and received full payment in May. Ivy also incurred expenses of $1,500,000 in April that were paid in June. During May, Ivy paid its shareholders cash dividends of $500,000. What was the company's income before income taxes for the two months ended May 31 under the following methods of accounting?
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Cash Bash
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Accrual Basis
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a.
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$3,200,000
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$1,700,000
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b.
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$2,700,000
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$1,200,000
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c.
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$1,700,000
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$1,700,000
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d.
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$3,200,000
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$1,200,000
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