Homework Answers
a. The allowable deduction will be $800.
According to the law, only that part of investment interest expense will be allowed as deduction which is used to purchase taxable investments. Municipal bonds are not taxable while corporate bonds are. In the present case, the taxable interest income is $800 while the interest on debt is $2000 which is more than the taxable interest income and hence full $800 will be allowed as deduction.
b. The allowable deduction will be $1800.
Since there is no municipal bond interest income and interest received on corporate bonds is lower than the interest paid on investments, full $1800 will be allowed as deduction.
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there is no given time Chad pays $2,000 of interest on $20,000 of debt incurred for...
Chad pays $2,000 of interest on $20,000 of debt incurred for the purchase of municipal bonds...
Chad pays $2,000 of interest on $20,000 of debt incurred for the purchase of municipal bonds and corporate bonds. Chad receives $800 of interest on the municipal bonds and $800 of interest on the corporate bonds. a. What is his allowable deduction on the $2,000 of interest? b. How would your answer change if Chad's only investment income was $1,800 of interest on corporate bonds? Explain your answers and show all calculations.
Will thumbs up, thanks. Chad pays $2,000 of interest on $20,000 of debt incurred for the...
Will thumbs up, thanks.
Chad pays $2,000 of interest on $20,000 of debt incurred for the purchase of municipal bonds and corporate bonds. Chad receives $800 of interest on the municipal bonds and $800 of interest on the corporate bonds. a. What is his allowable deduction on the $2,000 of interest? b. How would your answer change if Chad's only investment income was $1,800 of interest on corporate bonds? Explain your answers and show all calculations.
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I need all blanks answeref. This is only information I have. MHE Reader Connect Help Save...
I
need all blanks answeref. This is only information I have.
MHE Reader Connect Help Save Saved Homework Alan inherited $100,000 with the stipulation that he "invest it to financially benefit his family." Alan and his wife Alice decided they would invest the inheritance to help them accomplish two financial goals: purchasing a Park City vacation home and saving for their son Cooper's education Vacation Home Cooper's Education Initial investment $50,000 $50,000 Investment horizon 5 years 18 years Alan and...
Chad pays $2,000 of interest on $20,000 of debt incurred for the purchase of municipal bonds and corporate bonds. Chad receives $800 of interest on the municipal bonds and $800 of interest on the corporate bonds. a. What is his allowable deduction on the $2,000 of interest? b. How would your answer change if Chad's only investment income was $1,800 of interest on corporate bonds? Explain your answers and show all calculations.
Will thumbs up, thanks.
Chad pays $2,000 of interest on $20,000 of debt incurred for the purchase of municipal bonds and corporate bonds. Chad receives $800 of interest on the municipal bonds and $800 of interest on the corporate bonds. a. What is his allowable deduction on the $2,000 of interest? b. How would your answer change if Chad's only investment income was $1,800 of interest on corporate bonds? Explain your answers and show all calculations.
4. Interest rates and their effect on corporate profits and investment prices Interest rates affect corporate profits and security prices. Based on your understanding of the relationship between interest rates and corporate profits and security prices, identify which of the following statements is true and which are false. True False Ststements The higher the interest rate on a firm's debt, the lower will be the firm's profits, all other considerations remaining constant. An increase in the interest rate paid by...
this is everything that was given.
Facts: BC Business Entity, owned equally by Bernie and Carl, reported the following items during 2018: Sales revenue 400,000 11,000 7,000 20,000 (150,000) (84,000) 8,000 (9,000) (2,000) (25,000) (40,000) Interest earned on corporate bonds Interest earned on State of Tennessee bonds Dividends from 10% owned domestic corporation Cost of goods sold Operating expenses Long-term capital gain Short-term capital loss Interest on loan used to purchase State of Tennessee Bonds Salary/guarantecd payment, paid to Bernie*...
Facts: BC Business Entity, owned equally by Bernie and Carl, reported the following items during 2018: Sales revenue Interest earned on corporate bonds Interest earned on State of Tennessee bonds Dividends from 10% owned domestic corporation Cost of goods sold Operating expenses Long-term capital gain Short-term capital loss Interest on loan used to purchase State of Tennessee Bonds Salary/guaranteed payment, paid to Bernie* Distribution of profits to owner(s)** 400,000 11,000 7,000 20,000 (150,000) (84,000) 8,000 (9,000) (2,000) (25,000) (40,000) *Salary...
Credits Debits 30,000 40,000 1,500 60,000 20,000 0 2,000 6,000 80,000 Account Title Cash Accounts receivable Supplies Inventory Notes receivable Interest receivable Prepaid rent Prepaid insurance Office equipment Accumulated depreciation Accounts payable Salaries payable Notes payable Interest payable Deferred sales revenue Common stock Retained earnings Dividends Sales revenue Interest revenue Cost of goods sold Salaries expense Rent expense Depreciation expense Interest expense Supplies expense Insurance expense Advertising expense Totals 30,000 31,000 0 50,000 0 2,000 60,000 28,500 4,000 146,000 0...
Credits Debits 30,000 40,000 1,500 60,000 20,000 0 2,000 6,000 80,000 Account Title Cash Accounts receivable Supplies Inventory Notes receivable Interest receivable Prepaid rent Prepaid insurance Office equipment Accumulated depreciation Accounts payable Salaries payable Notes payable Interest payable Deferred sales revenue Common stock Retained earnings Dividends Sales revenue Interest revenue Cost of goods sold Salaries expense Rent expense Depreciation expense Interest expense Supplies expense Insurance expense 30,000 31,000 0 50,000 0 2,000 60,000 28,500 4,000 146,000 0 70,000 18,900 11,000...
I
need all blanks answeref. This is only information I have.
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