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Maggy has a $6,000 outstanding HBP balance against which she must make minimum payments of $1,000 for each of the years 2018 to 2023 inclusive, after which the plan's balance will be zero. Maggy doubles her annual payment in 2018 and pays $2,000 instead of the required minimum payment of $1,000. Identify the statement that is correct. O The extra $1,000 payment will reduce the outstanding balance to $4,000 and Maggy's minimum repayment amount will be adjusted to $800 for each of the years 2019 to 2023 inclusive. The extra payment in 2018 will be disallowed as Maggy must follow the original repayment schedule. O The extra $1,000 payment will shorten Maggy's minimum repayment schedule by 1 year as she will be required to continue the minimum $1,000 payments but with the last payment finishing in 2022. O The extra payment in 2018 will allow Maggy to skip the 2019 and 2020 payments without triggering any tax consequences

Maggy has a $6,000 outstanding HBP balance against which she must make minimum payments of $1,000 for each of the years 2018 to 2023 inclusive, after which the plan's balance will be zero. Maggy doubles her annual payment in 2018 and pays $2,000 instead of the required minimum payment of $1,000. Identify the statement that is correct. O The extra $1,000 payment will reduce the outstanding balance to $4,000 and Maggy's minimum repayment amount will be adjusted to $800 for each of the years 2019 to 2023 inclusive. The extra payment in 2018 will be disallowed as Maggy must follow the original repayment schedule. O The extra $1,000 payment will shorten Maggy's minimum repayment schedule by 1 year as she will be required to continue the minimum $1,000 payments but with the last payment finishing in 2022. O The extra payment in 2018 will allow Maggy to skip the 2019 and 2020 payments without triggering any tax consequences

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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Maggy has a $6,000 outstanding HBP balance against which she must make minimum payments of $1,000 for each of the years 2018 to 2023 inclusive, after which the plan's balance will be zero. Maggy doubles her annual payment in 2018 and pays $2,000 instead of the required minimum payment of $1,000. Identify the statement that is correct. 000 O O The extra $1,000 payment will reduce the outstanding balance to $4,000 and Maggy's minimum repayment amount will be adjusted to $800 for each of the years 2019 to 2023 inclusive. The extra payment in 2018 will be disallowed as Maggy must follow the original repayment schedule. The extra $1,000 payment will shorten Maggy's minimum repayment schedule by 1 year as she will be required to continue the minimum $1,000 payments but with the last payment finishing in 2022. The extra payment in 2018 will allow Maggy to skip the 2019 and 2020 payments without triggering any tax consequences
Transcribed Image Text:Maggy has a $6,000 outstanding HBP balance against which she must make minimum payments of $1,000 for each of the years 2018 to 2023 inclusive, after which the plan's balance will be zero. Maggy doubles her annual payment in 2018 and pays $2,000 instead of the required minimum payment of $1,000. Identify the statement that is correct. 000 O O The extra $1,000 payment will reduce the outstanding balance to $4,000 and Maggy's minimum repayment amount will be adjusted to $800 for each of the years 2019 to 2023 inclusive. The extra payment in 2018 will be disallowed as Maggy must follow the original repayment schedule. The extra $1,000 payment will shorten Maggy's minimum repayment schedule by 1 year as she will be required to continue the minimum $1,000 payments but with the last payment finishing in 2022. The extra payment in 2018 will allow Maggy to skip the 2019 and 2020 payments without triggering any tax consequences
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