Windjammer Corporation, a cash-basis, calendar-year corporation sold $30,000 of merchandise to Jackpot Company in January, year one. In November, Jackpot declared bankruptcy without paying Windjammer. In year four, Jackpot had reorganized under a new owner and paid all of its old debts, including the $30,000 owed Windjammer. How does Windjammer treat these events?
1. Recognize $30,000 revenue in year one only.
2. Recognize $30,000 revenue in year four only.
3. Deduct $30,000 as a bad debt in year one.
4. Deduct $30,000 as a bad debt in year one; recognize $30,000 income in year four.