On June 2, 2020, Sam's Auto Sales sold Jim a used car on account for $20,000. Sam's Auto Sales uses the accrual method. In 2021, when the balance due on the account was $6,000, Jim filed for bankruptcy.  Sam was notified that he could not expect to receive any of the amount owed to him. In 2023 final settlement was made and Sam received $2,000. How much bad debt loss can Sam deduct on his tax return in 2021? options:   a. $0 b. $6,000 c. $4,000 d. $12,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On June 2, 2020, Sam's Auto Sales sold Jim a used car on account for $20,000. Sam's Auto Sales uses the accrual method. In 2021, when the balance due on the account was $6,000, Jim filed for bankruptcy.  Sam was notified that he could not expect to receive any of the amount owed to him. In 2023 final settlement was made and Sam received $2,000. How much bad debt loss can Sam deduct on his tax return in 2021?

options:
 
a. $0
b. $6,000
c. $4,000
d. $12,000
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