Answer:
Total Cash receipts collected during March will be $17,800
Explanation:
Collection in March from:
March Cash Sales [15000 x 20%] $3,000
February Credit sale [$ 20000 x 80% x 70%] $11,200
March Credit sale [$ 15000 x 80% x 30%] $3,600
Total Cash receipts collected during March $17,800
Answer: $4,435,000
Explanation:
The issuance price if the market rate of interest is 12% will be:
Annual interest = 500000 × 5.650(PV factor) = 2825000
Add: Face value = 5000000 × 0.322(PV factor) = 1610000
Total = $4,435,000
Therefore, the the issuance price if the market rate of interest is 12% is $4,435,000.
Answer:
a. Orange Furniture must include <u>$1,000</u> in gross income as the recovery of a prior deduction cost.
Since the 2016 bad debt deduction resulted in a tax benefit, the $1,000 recovery will be considered income. Orange's cost for this transaction = (35% 2015 tax rate - 12% 2016 tax rate) x $1,000 recovery = 23% x $1,000 = $230
b. How much must Marvin include in his gross income for 2017? <u>$800</u>
Marvin's net benefit from itemizing his taxes was $800, so that amount must be included as gross income due to the state's refund. Marvin will actually suffer a lose due to this transaction since during 2016, he was in the 15% tax bracket, while during 2017 his tax bracket is 35%. He saved 15% x $800 = $120 for 2016, but will have to pay 35% x $800 = $280 during 2017.
c. What amount, if any, will Barb include in her 2017 gross income? <u>$3,000</u>
Since Barb was able to recover the medical expenses, she must include in her gross income the tax benefit that she received for itemizing her deductions.