Question

Ed, an employee of the Natural Color Company, suffered from a rare disease that was very expensive to treat. The local media ran several stories about Ed’s problems, and the family created a website that generated more than $10,000 in gifts from individuals to help pay the medical bills. Ed’s employer provided hospital and medical insurance for its employees, but the policy did not cover Ed’s illness. When it became apparent that Ed could not pay all of his medical expenses, the hospital canceled the $25,000 Ed owed at the time of his death. After Ed’s death, his former employer paid Ed’s widow $12,000 in "her time of need." Ed’s widow also collected $50,000 on a group term life insurance policy paid for by Ed’s employer. What are Ed’s and his widow’s gross income?

Answer 1

Answer:

Ed and his Widow's Gross Income is:

$97,000

Explanation:

a) Data and Calculations:

Gifts from individuals     $10,000

Medical expense offset  25,000

Time of need pay             12,000

Group life insurance       50,000

Gross income               $97,000

b) Ed and his widow's gross income is $97,000.  It is the sum of  all forms of earnings before any deductions or taxes. The gross income is higher than the net income, which is defined as the gross income minus taxes and other deductions.