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ValentinkaMS [17]
3 years ago
12

Ramon incurred $83,100 of interest expense related to his investments this year. His investment income included $34,500 of inter

est and a $37,500 net capital gain on the sale of securities. Ramon has asked you to compute the amount of his deduction for investment interest, taking into consideration any options he might have. What is the maximum amount of Ramon’s investment interest expense deduction in the current year?
Business
1 answer:
cestrela7 [59]3 years ago
7 0

Answer:

$72,000

Explanation:

To calculate investment interest expense dedcution, we need to know the total investment income  & total investment interest expenses

Then there're 2 scenarios as followings:

  • If the investment interest expenses are less than the net investment income, the entire investment interest expense is deductible.
  • If the investment interest expenses are more than the net investment income, we can deduct the expenses up to the net investment income amount. The rest of the expenses are carried forward to next year.

In this example, Ramon's investment income is  $72,000 ($34,500 of interest and a $37,500 net capital gain on the sale of securities); is lower than his interest expenses of $83,100.

So Ramon is entiled to deduct $72,000 all the entire investment interest expense in current year

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marusya05 [52]

The general investment strategy based on a goal of acquiring existing, seasoned, relatively low-risk properties that are at least 80 percent leased to tenants with low credit risk, is Core strategy.

<h3 /><h3>What is a Core strategy?</h3>

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3 0
1 year ago
As of December 31, 2018, Moss Company had total cash of $160,000, notes payable of $86,000, and common stock of $52,800. During
tatyana61 [14]

Given:

Total cash = $160,000

Notes payable = $86,000

Common stock = $52,800

Find:

Retained earnings as on December 31, 2018

Computation for retained earning:

According to Accounting Equation:

Assets = Liabilities + Stock holder equity

Total Cash = Notes payable + Common stock + Retained earning

$160,000 = $86,000 + $52,800 + Retained earning

$160,000 = $138,800 + Retained earning

Retained earning = $160,000 - $138,800

Retained earning = $21,200

6 0
2 years ago
Staffing is a less important management function today than in the past true or false
In-s [12.5K]

Answer: statement is false

6 0
2 years ago
Read 2 more answers
Alton Company produces metal belts. During the current month, the company incurred the following product costs: Raw materials $1
Dimas [21]

Answer:

Total indirect product costs                        $30,750

Explanation:

The indirect product costs refer to all the costs that are associated with the manufacturing overheads and can be calculated as follows:

Electricity used in the Factory                   $25,000

Factory foreperson salary                          $3,750

Maintenance of factory machinery            $2,000

Total indirect product costs                        $30,750

7 0
3 years ago
The annual report for Malibu Beachwear reported the following transactions affecting stockholders’ equity:a. Purchased $350,100
cestrela7 [59]

Answer:

Malibu Beachwear

Indication of the effect (+ for increase, − for decrease, +/− for increase/decrease) of each of these transactions on total assets, liabilities, and stockholders’ equity:

a. Purchased $350,100 of common stock now held in treasury.

Assets (-$350,100) = Liabilities + Shareholders' Equity (-$350,100)

b. Declared cash dividends in the amount of $260,050.

Assets = Liabilities (+$260,050) + Shareholders' Equity (-$260,050)

c. Paid the dividends in (b).

Assets (-$260,050) = Liabilities (-$260,050) + Shareholders' Equity

d. Issued 101,000 new shares of $0.10 par value common shares for $2 per share.

Assets (+$202,000) = Liabilities + Shareholders' Equity (+$202,000)

e. Closed the Dividends account.

Assets = Liabilities + Shareholders' Equity

Explanation:

a. The purchase of common stock held in treasury implies that Malibu Beachwear bought its own shares from investors and paid cash.  The recording of the transaction involves a reduction in Cash (Assets) and Shareholders' Equity with the creation of Treasury Stock Account.  The treasury stock account is a contra account to the Common Stock account and the balance is deducted from the Shareholders' Equity in the balance sheet.

b. By declaring cash dividends, Malibu Beachwear is returning to its stockholders part of the assets that belong to them.  This transaction reduces the Shareholders' Equity (Retained Earnings) and increases the liabilities with Dividends Payable in the sum of $260,050 respectively.

c.  The payment of the cash dividend by Malibu reduces the Assets (Cash) and the Liabilities (Dividends Payable) in the sum of $260,050.

d. The issue of 101,000 new shares of $0.10 par value for $2 per share by Malibu Beachwear increases its Assets (Cash) with the sum of $202,000 (101,000 x $2) and the Shareholders' Equity (Common Stock with $10,100 and Additional Paid-in Capital- Common Stock with $191,900).

e.  Closing the dividends account does not affect the accounting equation.  Instead, it affects the Income Summary (Statement of Retained Earnings) to which the account is closed.

f. The accounting equation of Assets = Liabilities + Equity is an important feature of the double-entry system of bookkeeping and financial accounting.  The equation implies that every transaction affects the two sides of the equation since two or more accounts are involved.  Where it does not affect the two sides, it implies that one side is affected twice or more.  This equation keeps the assets and liabilities + equity sides in balance at all times.  It also implies that Malibu Beachwear for every transaction, will have the assets equal the liabilities or equity.

4 0
3 years ago
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