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$6,000 $1,500 $1,200

$6,000 $1,500 $1,200

FINANCIAL ACCOUNTING
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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Sally was an all-state soccer player during her junior and senior years in high school. She accepted an athletic scholarship from State University. The scholarship provided the following: Tuition and fees $15,000 Housing and meals $6,000 Books and supplies $1,500 Transportation $1,200 a. Determine the effect of the scholarship on Sally's gross income. Included in/Excluded from Income Tuition and fees Housing and meals Books and supplies Transportation b. Sally's brother, Willy, was not a gifted athlete, but he received $8,000 from their father's employer as a scholarship during the year. The employer grants the children of all executives a scholarship equal to one-half of annual tuition, fees, books, and supplies. Willy also received a $6,000 scholarship (to be used for tuition) as the winner of an essay contest related to bioengineering, his intended field of study. Indicate whether the following statements are "True" or "False" regarding the effect of the scholarships on Willy's and his father's gross income. The $8,000 scholarship is additional compensation to Willy's father and is included in his gross income. • The scholarship is simply a payment to assist children of employees seeking an education and so is excluded from Willy's father's gross income. • The $6,000 scholarship is taxable to Willy since he received it as a result of a contest.
Transcribed Image Text:Sally was an all-state soccer player during her junior and senior years in high school. She accepted an athletic scholarship from State University. The scholarship provided the following: Tuition and fees $15,000 Housing and meals $6,000 Books and supplies $1,500 Transportation $1,200 a. Determine the effect of the scholarship on Sally's gross income. Included in/Excluded from Income Tuition and fees Housing and meals Books and supplies Transportation b. Sally's brother, Willy, was not a gifted athlete, but he received $8,000 from their father's employer as a scholarship during the year. The employer grants the children of all executives a scholarship equal to one-half of annual tuition, fees, books, and supplies. Willy also received a $6,000 scholarship (to be used for tuition) as the winner of an essay contest related to bioengineering, his intended field of study. Indicate whether the following statements are "True" or "False" regarding the effect of the scholarships on Willy's and his father's gross income. The $8,000 scholarship is additional compensation to Willy's father and is included in his gross income. • The scholarship is simply a payment to assist children of employees seeking an education and so is excluded from Willy's father's gross income. • The $6,000 scholarship is taxable to Willy since he received it as a result of a contest.
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