Sandra, a cash-basis taxpayer, operated a pet store on the cash method of accounting. She lent $4,500 to a friend but then forgave the loan. She also wrote off an account receivable of $2,200 that became uncollectible. She had to pay $8,000 on a supplier’s debt that she guaranteed in order to maintain a source of inventory. What is Sandra’s business bad debt expense? (a) $2,200 (b) $4,500 (c) $8,000 (d) $10,200 Choose the correct answer and defend your choice in 2-3 sentences.
Sandra, a cash-basis taxpayer, operated a pet store on the cash method of accounting. She lent $4,500 to a friend but then forgave the loan. She also wrote off an account receivable of $2,200 that became uncollectible. She had to pay $8,000 on a supplier’s debt that she guaranteed in order to maintain a source of inventory. What is Sandra’s business bad debt expense? (a) $2,200 (b) $4,500 (c) $8,000 (d) $10,200 Choose the correct answer and defend your choice in 2-3 sentences.
Chapter7: Deductions And Losses: Certain Business Expenses And Losses
Section: Chapter Questions
Problem 2DQ
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Sandra, a cash-basis taxpayer, operated a pet store on the cash method of accounting. She lent $4,500 to a friend but then forgave the loan. She also wrote off an account receivable of $2,200 that became uncollectible. She had to pay $8,000 on a supplier’s debt that she guaranteed in order to maintain a source of inventory. What is Sandra’s business
(a) $2,200
(b) $4,500
(c) $8,000
(d) $10,200
Choose the correct answer and defend your choice in 2-3 sentences.
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