a. Josh borrowed $90,500 from First State Bank using his business assets as collateral. He used...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
a. Josh borrowed $90,500 from First State Bank using his business assets as collateral. He used the money to buy City of Blanksville bonds. Over the course of a year, Josh paid interest of $8,300 on the borrowed funds, but he received $7,300 of interest on the bonds. Deductible amount b. Josh purchased a piece of land for $80,000 in order to get a location to expand his business. He also paid $4,100 to construct a new driveway for access to the property. Deductible amount c. This year Josh paid $22,600 to employ the mayor's son in the business. Josh would typically pay an employee with these responsibilities about $21,500 but the mayor assured Josh that after his son was hired, some city business would be coming his way. Deductible amount d. Josh paid his brother, a mechanic, $3,500 to install a robotic machine for Josh's business. The amount he paid to his brother is comparable to what he would have paid to an unrelated person to do the same work. Once the installation was completed by his brother, Josh began calibrating the machine for operation. However, by the end of the year, he had not started using the machine in his business. Deductible amount a. Josh borrowed $90,500 from First State Bank using his business assets as collateral. He used the money to buy City of Blanksville bonds. Over the course of a year, Josh paid interest of $8,300 on the borrowed funds, but he received $7,300 of interest on the bonds. Deductible amount b. Josh purchased a piece of land for $80,000 in order to get a location to expand his business. He also paid $4,100 to construct a new driveway for access to the property. Deductible amount c. This year Josh paid $22,600 to employ the mayor's son in the business. Josh would typically pay an employee with these responsibilities about $21,500 but the mayor assured Josh that after his son was hired, some city business would be coming his way. Deductible amount d. Josh paid his brother, a mechanic, $3,500 to install a robotic machine for Josh's business. The amount he paid to his brother is comparable to what he would have paid to an unrelated person to do the same work. Once the installation was completed by his brother, Josh began calibrating the machine for operation. However, by the end of the year, he had not started using the machine in his business. Deductible amount
Expert Answer:
Answer rating: 100% (QA)
Answer a 0 The interest expense is not deductible expense associated with t... View the full answer
Related Book For
Fundamental financial accounting concepts
ISBN: 978-0078025365
8th edition
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward
Posted Date:
Students also viewed these accounting questions
-
Metal Works borrowed $100,000 cash from First State Bank in 2013: Required a. Was this event an asset source, use, or exchange transaction for Metal Works? b. Was this event an asset source, use, or...
-
1. What is the pH of a solution that has an [H*] concentration of: a. 6.50 x 10-0 mol/L b. 1.00 x 10 mol/L 2. What is the [H*] concentration of a solution with pH of: a. 3.82 b. 11.11 3. Calculate...
-
A bank customer purchased a bank money order and paid for it with a forged check. The money order was negotiable and was acquired by N, who was a holder in due course. When N sued the bank on the...
-
If the owner of a company takes merchandise for personal use, what account is debited? a. Owners capital b. Owners withdrawals c. Purchases d. Cash
-
The motor of a fan turns a small wheel of radius rm = 2.00 cm. This wheel turns a belt, which is attached to a wheel of radius ri = 3.00 cm that is mounted to the axle of the fan blades. Measured...
-
The table gives the population of the world in the 20th century. (a) Estimate the rate of population growth in 1920 and in 1980 by averaging the slopes of two secant lines. (b) Use a graphing...
-
As sales manager for a global technology company, you have been tasked with opening up a new market in Asia. One of your responsibilities is to create a sales force consisting of 20 new salespeople....
-
Arthur Company is considering investing in an annuity contract that will return $46,000 annually at the end of each year for 15 years. What amount should Arthur Company pay for this investment if it...
-
Discounted economy airfares have risen the most, but there is still strong demand for them. What does this suggest about the price elasticity of demand (PED) for these fares, the slope of the demand...
-
It's amazing how much difference there is in the way proposals are presented at two different firms," said John Woods to his assistant, Pete Madsen, as he pointed to the stack of capital investment...
-
Present strategic recommendations for digital fitness app business (MapMyFitness) in Under Armour.
-
Prepare the following workings, analysed by product, based on the information: 2.1.2. Calculate fixed and variable overheads using the high/low method. (4 marks) 2.1.3. Marginal cost card showing...
-
UMA, owner of UMA General Merchandising, and ASA, sole proprietor of ASA Trading, decided to combine their businesses on February 15, 2021 in order to cope up with the worsening business and economic...
-
An international technology firm, OmniTech Intelligences, is on high alert due to a looming cyber threat from a group of notorious hacker syndicates. The company has a specialized cybersecurity unit,...
-
With regard to Mr. DOE's job as a nurse, Mr. DOE receives an annual salary of $70,000. Mr. DOE's employer withheld: 1) $12,000 of federal income taxes; 2) $3,500 of state income taxes; and 3) all...
-
Consider the following time series: Quarter Year 1 71 49 58 78 a. Construct a time series plot. b. What type of pattern exists in the data? Quarter 1 2 Year 1 1690 940 2625 2500 Year 2 2. The...
-
Define ethical leadership and discuss how personal morality and leader morality contribute to ethical leadership using examples to illustrate your answer.
-
Thalina Mineral Works is one of the worlds leading producers of cultured pearls. The companys condensed statement of cash flows for the years 20182020 follows. Required Comment on Thalina Mineral...
-
Jan Perkins is a business consultant. She analyzed the business processes of one of her clients, Diamond Companies, in November 2013. She prepared a report containing her recommendation for changes...
-
Smart Business Systems has a small number of sales on account but is mostly a cash business. Consequently, it uses the direct write-off method to account for uncollectible accounts. During 2013 Smart...
-
What is the historical cost concept and how does it relate to verifiability?
-
When the Glen Canyon hydroelectric power plant in Arizona is running at capacity, 690 m 3 of water flows through the dam each second. The water is released 220 m below the top of the reservoir. If...
-
A pronghorn, the fastest North American animal, is capable of running at 18 m/s (40 mph) for 10 minutes, after which it must slow down. The time limit isnt because the pronghorn runs out of energy;...
-
When the hoof of a galloping horse hits the ground, the digital flexor tendon in its lower leg may stretch by 5% in length, a significant stretch for this 45 cm tendon. The tendon is elastic; mostbut...
Study smarter with the SolutionInn App