Jennifer uses the cash method. Which of the following transactions result in gross income in the current year? Car, worth $7,000, received as a consulting fee $500 of interest credited to her checking account, but not withdrawn Wages payable from a corporation with ample funds, in which she is a 12 percent shareholder, unpaid at year-end Stock, worth $20,000, for services rendered, fully vested if Jennifer still works for the corporation in three years $700 of dental services (bill cancelled upon Jennifer’s estate planning advice to the dentist’s mother-in-law) Sale of a used car for a note due in one year, face value $3,000, fair market value $2,500. No elections were made
Jennifer uses the cash method. Which of the following transactions result in gross income in the current year? Car, worth $7,000, received as a consulting fee $500 of interest credited to her checking account, but not withdrawn Wages payable from a corporation with ample funds, in which she is a 12 percent shareholder, unpaid at year-end Stock, worth $20,000, for services rendered, fully vested if Jennifer still works for the corporation in three years $700 of dental services (bill cancelled upon Jennifer’s estate planning advice to the dentist’s mother-in-law) Sale of a used car for a note due in one year, face value $3,000, fair market value $2,500. No elections were made
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Jennifer uses the cash method. Which of the following transactions result in gross income in the current year?
- Car, worth $7,000, received as a consulting fee
- $500 of interest credited to her checking account, but not withdrawn
- Wages payable from a corporation with ample funds, in which she is a 12 percent shareholder, unpaid at year-end
- Stock, worth $20,000, for services rendered, fully vested if Jennifer still works for the corporation in three years
- $700 of dental services (bill cancelled upon Jennifer’s estate planning advice to the dentist’s mother-in-law)
- Sale of a used car for a note due in one year, face value $3,000, fair market value $2,500. No elections were made
Expert Solution
Step 1 Introduction
If a business uses cash method, then the transaction is included in income only when it gets received in cash form.
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