Answer:
Sissie must report both operations separately, even though the gain in one of them does offset the loss on the other:
- selling of equipment A: reported gain (increased ordinary income) of $22,510 ($60,000 - $37,490)
- selling of equipment B: reported ordinary loss of $14,490 ($23,000 - $37,490)
The effect of both transactions is a net gain of $8,020 that will increase Sissie's ordinary income.
Explanation:
Both assets are § 1231 assets, and § 1245 allows deprecation recapture on the sale of equipment A, so the gain must be considered ordinary income. The loss on the sale of equipment B is a § 1231 loss which must be treated as an ordinary loss.
Answer: Be split between Duke and the law firm, but how it will be split cannot be determined without more information.
Explanation: The law firm would have entered into a certain type of contract when signing Duke. Therefore the contract terms would determine how he is paid and also the bonus he would tend to get in times of outstanding performances from Duke the employee.
It's only when the contract terms is known that we can able to determine how much Duke would take home in a situation of an excess profit.
Answer:
d. debit Accounts Receivable; credit Cash
Explanation:
The cash has been credited with $695 instead of $965 which means that $270 has been credited short. Same way, the liabilities have been debited by $270 short. So, we will have to reverse the entry ie. debit Accounts Receivable; credit Cash
Answer:
c as price increases, quantity demanded decreases.
Explanation:
The law of demand states that the higher the price of an item, the lower the quantity demanded of that good. While the lower the price, the higher the quantity demanded.
This shows an inverse relationship. As the price of a commodity increases from a former price to a new price, the consumers of that commodity would purchase less of it. But if the reverse is the case, that is price is lowered, consumers would purchase more quantity of the commodity.
