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Mandarinka [93]
2 years ago
7

Monty loaned his friend Ned $24,000 three years ago. Ned signed a note and made payments on the loan. Last year, when the remain

ing balance was $18,000, Ned filed for bankruptcy and notified Monty that he would be unable to pay the balance on the loan. Monty treated the $18,000 as a nonbusiness bad debt. Last year, before considering the tax implications of the nonbusiness bad debt, Monty had capital gains of $7,200 and taxable income of $42,000. During the current year, Ned paid Monty $16,200 in satisfaction of the debt.
Determine Monty's tax treatment for the $16,200 received in the current year.
The nonbusiness bad debt of $18,000 would have been reported as a ________ , and $________ would be included in Monty's gross income.
Business
1 answer:
Airida [17]2 years ago
5 0

Answer:

Short term capital loss and $10,800

Explanation:

Remaining balance - Capital gains

$18,000 - $7,200 = $10,800

Monty can report the bad debt of $18,000 as short term capital loss since it is expense for the business and receivables are not recoverable. This amount can be reported as loss of the business.

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3 0
3 years ago
Lewis Inc. owns 40% of Morgan and applies the equity method. During the current year, Lewis buys inventory costing $400,000 and
Alchen [17]

Answer:

The correct answer is a) $24,000

Explanation:

At the end of the year, Morgan still holds $140,000 of this merchandise

Lewis Inc. owns 40% of Morgan and applies the equity method

40% = 0.4

$140,000 x 40% = $56,000

Lewis buys inventory costing $400,000 and sells it to Morgan for $700,000.

$700,000 - $400,000 = $300,000

=$56,000 x ($300,000 ÷ $700,000)

=$56,000 x 0,428571429

= $24,000

7 0
3 years ago
Mickley Company’s plantwide predetermined overhead rate is $18.00 per direct labor-hour and its direct labor wage rate is $12.00
ipn [44]

Answer:

Results are below.

Explanation:

Giving the following information:

Predetermined overhead rate= $18.00 per direct labor-hour

Direct labor wage rate= $12.00 per hour.

Job A-500

Direct materials $220

Direct labor $60

<u>First, we need to calculate the direct labor hours:</u>

Direct labor hours= 60/12= 5

<u>Now, we can allocate overhead:</u>

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 18*5

Allocated MOH= $90

<u>Finally, the unit cost:</u>

<u></u>

Total cost= 220 + 60 + 90= $370

Unit cost= 370/60

Unit cost= $6.17

5 0
3 years ago
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rjkz [21]

Answer:

Explanation:

may be

4 0
3 years ago
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iVinArrow [24]

Explanation:

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When the calculation is below a given range and there appears to be no better estimation than any other beyond that range, the minimum limit will be applied.

Therefore, it is appropriate to include as liabilities the total sums ($250,000) of the probable promised payout. Once the device is purchased, the retrofitting expenses should be paid, as they greatly boost future computer operation.

8 0
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