Sally is in the business of purchasing accounts receivable. Last year, Sally purchased an account receivable...
Sally is in the business of purchasing accounts receivable. Last year, Sally purchased an account receivable with a face value of $80,000 for $60,000. During the current year, Sally settled the account, receiving $65,000. Determine the maximum amount of the bad debt deduction for Sally for the current year. If an amount is zero, enter "0".
Sally's basis in the account receivable is $ .
She has a bad debt deduction of $ .
Homework Answers
Assets: Asset is the resource used by the company to generate income. Assets can be classified into different types, Current assets, long term assets and intangible assets. Assets that are expected to be converted into cash within one year are called as current assets. Assets that are expected to be converted into cash more than one year are called as long-term assets. Asset which cannot be touch and see is called as intangible asset. Goodwill, patents etc. are the examples of intangible assets.
Expenses: The costs borne by a company to produce and sell the goods and services to the customers are known as expenses.
Uncollectible accounts: Company may not be able to collect the full amount from the sales made on credit; such unpaid amount is referred to as uncollectible accounts.
Write-off: The management reduces the value of an asset if the management decides that the value of the asset has decreased. This is referred as a write-off.
Accounts receivable: Accounts receivable is a financial claim or declaration which signifies that seller receives cash from the buyer within a short period for the goods or services received.
Bad debt expense: Since the revenues should match the expenses of a particular period of time, the bad debts are recorded as expenses that match with the revenues of that period. Such bad debts recognized are referred to as bad debt expense.
Calculate S's basis in the account receivable.
It is given that face value of the accounts receivable is $80,000 and purchase price of accounts receivable is $60,000. Basis in the account receivable is considered as a purchase price of the accounts receivable. Therefore, the S's basis in the account receivable is $60,000.
Determine the maximum amount of the bad debt deduction for S.
S's basis in the account receivable is $60,000.
Maximum amount of the bad debt deduction for S is $0.
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Sally is in the business of purchasing accounts receivable. Last
year, Sally purchased an account receivable...
Sally is in the business of purchasing accounts receivable. Last year Sally purchased an account receivable...
Sally is in the business of purchasing accounts receivable. Last year Sally purchased an account receivable with a face value of $80,000 for $60,000. During the current year, Sally settled the account, receiving $65,000. Determine the maximum amount of the bad debt deduction for Sally for the current year. If an amount is zero, enter "0". Sally's basis in the account receivable is $ X. Therefore, she has a bad debt deduction of and income of $
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James is in the business of debt collection. He purchased a $20,000 account receivable from Green Corporation for $15,000. During the year, James collected $17,000 in final settlement of the account. How much can James take as a bad debt deduction in the current year for this transaction: a) $ 2000 (loss) b)0 c)$5000 d)$3000 2. Which of the following credits is considered “refundable”? a.) Child and dependent care credit b.) Retirement plan contribution credit c.) Child tax credit d.)...
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Sally is in the business of purchasing accounts receivable. Last year Sally purchased an account receivable with a face value of $80,000 for $60,000. During the current year, Sally settled the account, receiving $65,000. Determine the maximum amount of the bad debt deduction for Sally for the current year. If an amount is zero, enter "0". Sally's basis in the account receivable is $ X. Therefore, she has a bad debt deduction of and income of $
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