On January 1, 2019, Kunto, a cash basis taxpayer, pays $112,796 for a 24-month certificate. The...
On January 1, 2019, Kunto, a cash basis taxpayer, pays $112,796 for a 24-month certificate. The certificate is priced to yield 4% (the effective interest rate) with interest compounded annually. No interest is paid until maturity, when Kunto receives $122,000. In your computations, round any amounts to the nearest dollar. a. Compute Kunto’s gross income from the certificate for 2019. $ b. Compute Kunto’s gross income from the certificate for 2020. $
Homework Answers
a. Kunto's income earned in 2019 is calculated as follows:
$112,796 x 4% = $4,511.84 rounded to $4,512.
b. Kunto's income earned in 2020 is calculated as follows:
[($112,796 + $4,512) x 4%] = $4,692.32, rounded to $4,692
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On January 1, 2019, Kunto, a cash basis taxpayer, pays $112,796
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Exercise 4-20 (Algorithmic) (LO. 2) On January 1, 2020, Kunto, a cash basis taxpayer, pays $88,758 for a 24-month certificate. The certificate is priced to yield 4% (the effective interest rate) with interest compounded annually. No interest is paid until maturity, when Kunto receives $96,000. In your computations, round any amounts to the nearest dollar. a. Compute Kunto's gross income from the certificate for 2020. 3,550.32 x b. Compute Kunto's gross income from the certificate for 2021. 85,066.32 x Feedback...
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