Which of the following entities may not use the cash method of accounting?
A partnership with average annual gross receipts in excess of $5 million.
A C corporation whose average annual gross receipts for the preceding 3 taxable years do not exceed $5 million.
A C corporation that is substantially owned by its employees and whose business is selling goods with annual gross receipts in excess of $5 million for all tax years since its inception.

An S corporation.
Explain your answer -
2. Dowd, a cash-basis engineering consultant, wanted to defer income to next year. A client who was in Dowd's office on December 31 of the current year offered to pay his $2,000 bill immediately, but Dowd told him to pay in January. A check for $5,000 from another client arrived in the mail on December 29, and Dowd told his office manager not to deposit it until January. Dowd also told his office manager not to send a client a bill for $3,000 for services performed in the current year until January of next year. How much income from these transactions should Dowd report in the current year?