1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ray Of Light [21]
3 years ago
14

The owner of a life insurance policy has decided to surrender the life insurance policy to the insurer. Since inception of the l

ife insurance contract, the owner has paid premiums of $100,000 and received cash policy dividends equal to $20,000. If at the surrender date, the owner receives a cash payment of $140,000 from the insurer, what is his gain/ loss subject to income tax on the life insurance policy?
Business
1 answer:
svet-max [94.6K]3 years ago
8 0

Answer:

$60,000

Explanation:

Data provided in the question:

Premiums paid = $100,000

Cash policy dividends received = $20,000

Cash surrender value = $140,000

Now,

The owners adjusted basis in the property

= Premiums paid  - Cash policy dividends received

= $100,000 - $20,000

= $80,000

Therefore,

The gain on the policy = Cash surrender value -  owners adjusted basis

= $140,000 - $80,000

= $60,000

You might be interested in
Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balan
Pani-rosa [81]
The answer is: <span>Jan. 7. Paid cash dividends of $0.18 per share on the common stock. The dividend had been properly recorded when declared on Nov 30 of the preceding fiscal year for $66,600. </span>
<span>Dr Common Dividends Payable 66,000 </span>
<span>Cr Cash 66,000 </span>

<span>Feb. 9. Issued 50,000 shares of common stock for $600,000 </span>
<span>Dr Cash 600,000 </span>
<span>Cr Common Stock 400,000 (50,000 x $8 par value) </span>
<span>Cr Additional Paid-In Capital 200,000 </span>

<span>May 21. Sold all of the treasury stock for $300,000 </span>
<span>Dr Cash 300,000 </span>
<span>Cr Common (Treasury) Stock 240,000 </span>
<span>Cr Additional Paid-In Capital 60,000 </span>

<span>July 1. Declared a 4% stock dividend on common stock, to be capitalized at the market price of the stock, which is $13 per share. </span>
<span>400,000 - 30,000 + 50,000 + 30,000 = 450,000 shares outstanding </span>
<span>Dr Stock Dividends 234,000 (450,000 x 4% x $13 market price) </span>
<span>Cr Stock Dividends Distributable 144,000 (450,000 x 4% x 8 par value) </span>
<span>Cr Additional Paid-In Capital 90,000 (450,000 x 4% x 5 excess of par value) </span>

<span>Aug. 15. Issued the certificates for the dividend declared on July 1 </span>
<span>Dr Stock Dividends Distributable 144,000 </span>
<span>Cr Common Stock 144,000 </span>

<span>Sept. 30. Purchased 10,000 shares of treasury stock for $100,000. </span>
<span>Dr Common (Treasury) Stock 100,000 </span>
<span>Cr Cash 100,000 </span>

<span>Dec 27. Declared a $0.20-per-share dividend on common stock </span>
<span>400,000 - 30,000 + 50,000 + 30,000 +18,000 - 10,000 = 458,000 shares now outstanding </span>
<span>Dr Cash Dividends 91,600 (458,000 x $0.20) </span>
<span>Cr Common Dividends Payable 91,600 </span>

<span>31. Closed the credit balance of the income summary account, $485,000. </span>
<span>Dr Income Summary 485,000 </span>
<span>Cr Retained Earnings 485,000 </span>

<span>31. Closed the two dividends accounts to Retained Earnings. </span>
<span>Dr Retained Earnings 234,000 </span>
<span>Cr Stock Dividends 234,000 </span>

<span>Dr Retained Earnings 91,000 </span>
<span>Cr Cash Dividends 91,000 </span>

<span>3) </span>
<span>7,100,000 Beginning balance </span>
<span>+ 485,000 </span>
<span>- 234.000 </span>
<span>- 91,000 </span>
<span>= 7,260,000 Ending balance </span>

<span>4) </span>
<span>3,824,000 Common Stock (468,000 x 8) </span>
<span>+ 950,000 Additional Paid-In Capital (600,000 + 200,000 + 60,000 + 90,000) </span>
<span>+ 7,260,000 Retained Earnings </span>
<span>- 100,000 Treasury Stock </span>
<span>= 11,934,000 Total Stockholders' Equity</span>
5 0
3 years ago
A cotton swab manufacturer looked at its abysmal sales figures and conducted an organizational situation analysis. Next, it deci
faltersainse [42]

Answer:

Formulating effective strategies and tactics to achieve the objective

Explanation:

This is usually done by gathering and analysing the required information to be able to formulate a strategy that would be implemented to achieve the vision and objective of the company.

8 0
3 years ago
Read 2 more answers
Duck and cover was a famous federal government film used to prepare students for . a nuclear war chemical warfare terrorist atta
Misha Larkins [42]
<span>Duck and Cover was a famous Federal government film used to prepare students for a nuclear war.</span>
3 0
3 years ago
Read 2 more answers
Tara Potter is a marketing consultant for Top Research Inc., and often recommends ______ focus groups, which are more convenient
9966 [12]

Answer:

A, online

Explanation:

Online focus groups give rooms for a wide range of data collection as the internet has made the whole world a (global) village. This means that the whole world is connected without having to be physically present in every part of the world.

For Tara Potter to be able to gather enough data to help with her research, the online focus groups are the best places to gather such data as she has access to a lot of people from diverse geographical locations, thereby saving her the stress of going around various geographical area.

Cheers.

7 0
4 years ago
After a fairly short plane ride from new york city, irving found himself on a dusty road with goats, chickens, and motor scooter
Amanda [17]
The answer from the given options is "culture shock".


Culture shock refers to an experience an individual may have when one moves to a social domain which is not quite the same as one's own; it is likewise the individual confusion a man may feel while encountering a better approach for life because of migration or a visit to another nation, a move between social situations, or basically change to another sort of life. One of the most well-known reasons for culture shock includes people in a foreign environment or situation. Culture shock can be depicted as comprising of at least one of four particular stages: vacation, arrangement, modification, and adjustment.
8 0
3 years ago
Other questions:
  • The business side of IT is very different from the business itself. T/F
    7·1 answer
  • Dinero bank offers you a five-year loan for $58,000 at an annual interest rate of 6.25 percent. what will your annual loan payme
    9·1 answer
  • Kimberli manages employees at Mountaintop Ski Resorts. She has noticed that one of her employees submits via the computer system
    7·1 answer
  • After determining its profit-maximizing quantity of output, how does a monopolistic competitor choose its price? Group of answer
    15·1 answer
  • What does bad debt do to the profit of a business?​
    8·1 answer
  • A wedding services company changes its marketing strategy to reflect the fact that more LGBTQ​ (lesbian/gay/bisexual/transgender
    9·1 answer
  • One advantage of proprietary software versus off-the-shelf software is that _____.
    8·2 answers
  • Geschke Corporation, which produces commercial safes, has provided the following data:
    15·1 answer
  • The discounting function (or mechanism) of markets is based upon the assumption that the stock market essentially discounts all
    15·1 answer
  • What policy document provides guidelines to promote information sharing?.
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!