8. Joe College incorporated a business in May 2001 to rent out hot tubs for parties. He bought 3 tubs at that time for $1200 each. In 2003 he had rental income of $11,540 and operating expenses of $4250. In October of 2003 he sold one of the tubs for $850. Assume that a hot tub is in the 7-year property class. What was Joe's after-tax cash flow for 2003? (Hint: Assume you can depreciate 2.5 hot tubs in 2003 based on the half-year convention.)

8. Joe College incorporated a business in May 2001 to rent out hot tubs for parties. He bought 3 tubs at that time for $1200 each. In 2003 he had rental income of $11,540 and operating expenses of $4250. In October of 2003 he sold one of the tubs for $850. Assume that a hot tub is in the 7-year property class. What was Joe's after-tax cash flow for 2003? (Hint: Assume you can depreciate 2.5 hot tubs in 2003 based on the half-year convention.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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