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
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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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
options:
a. $0
b. $6,000
c. $4,000
d. $12,000
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