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Leona [35]
3 years ago
13

Exercise 7-29 (LO. 6) Tim, a single taxpayer, operates a business as a single-member LLC. In 2018, his LLC reports business inco

me of $225,000 and business deductions of $575,000, resulting in a loss of $350,000. What are the implications of this business loss? Tim has an excess business loss of $ . Can this business loss be used to offset other income that Tim reports? If so, how much? If not, what happens to the loss? Tim may use $ of the $350,000 LLC business loss, to offset . The excess business loss is .
Business
1 answer:
Taya2010 [7]3 years ago
4 0

Answer:

From 2018, there is a threshold limit of $250,000 defined by IRS for single:

(a) Tim has an excess business loss:

= Business loss - Threshold

= $350,000 - $250,000

= $100,000

(b) Tim may use $250,000 of the $350,000 LLC business loss to offset non business income.

The excess business loss is treated as the portion of the Tim's NOL carry forward.

Excess business loss of $100,000 will be treated as the NOL carryforward to subsequent years.

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Exercise 8-3
7nadin3 [17]

Answer:

(a) Prepare the entries to record sales and collections during the period.

  • It had net credit sales of $800,000  

Dr Accounts receivable $ 800,000

Cr Sales $ 800,000

  • Collections of $763,000.

Dr CASH $ 763,000

Cr Accounts receivable $ 763,000

(b) Prepare the entry to record the write-off of uncollectible accounts during the period.

  • It wrote off as uncollectible accounts receivable of $7,300  

Dr Allowance for Uncollectible Accounts $ 7,300

Cr Accounts receivable $ 7,300

(c) Prepare the entries to record the recovery of the uncollectible account during the period.

  • However, a $3,100 account previously written off as uncollectible was recovered before the end of the current period.  

Dr Accounts receivable $ 3,100

Cr Allowance for Uncollectible Accounts $ 3,100

(d) Prepare the entry to record bad debt expense for the period.

  • Uncollectible accounts are estimated to total $25,000 at the end of the period.  

Dr Bad Debt Expense $ 20,200

Cr Allowance for Uncollectible Accounts $ 20,200

Explanation:

If the company applies the allowance method, it means that the account Allowance for Uncollectible Accounts must show as balance the estimated value of $25,000

Because the company already has a CREDIT balance in the Allowance for Doubtful Accounts it's necessary to register an entry that complement the existing value and reflect the estimated value, $ 20,200  

Bad accounts are those credits granted by the company and there is no possibility of being charged.

When customers buy products on credits but the company cannot collect the debt, then it's necessary to cancel the unpaid invoice as uncollectible.

One way is to directly cancel bad debts at the time it was decided that the credit is bad, the total amount reported as bad debt expenses negatively affect the income statement and the accounts receivable are reduced by the same amount, less assets

The other way is to determine a percentage of the total amount of accounts receivable as bad debts, there are many ways to analyze accounts receivable and calculate the value of bad debts.

When the company has the percentage of uncollectible accounts, the required journal entry is Bad Expenses (debit) with Reserve for Bad Accounts (credit)

At the time of cancellation, since the expenses were recognized before, we only use the Allowance for Uncollectible Accounts (Debit)  with accounts receivable (credit), with this we are recognizing the bad credit of the company.

7 0
3 years ago
Summarise the following passage in on more than 60w words and supply an appropriate title:every second,1 hectare of the world's
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Answer:

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Explanation:

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7 0
3 years ago
Minors are liable for the reasonable value of the necessary:______.
kotegsom [21]

Answer:

b. that they agreed to purchase.

Explanation:

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8 0
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The answer is a)True.....

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When setting your schedule, it is sometimes necessary to tell people "No." Please select the best answer from the choices provid
erma4kov [3.2K]

The answer is true.  In business, you have to prioritize what is the most important task to do for the day as this might affect your business.  You have to choose which is the most to the least important things to do.  The most important things come first especially if it has a big impact on your career.

8 0
3 years ago
Read 2 more answers
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