Patrick King dies on January 15, 2021. On the date of his death, Patrick had a bank accountwhich pays interest on a quarterly basis. On March 31, 2021, $12,000 of interestincome is credited to Patrick's bank account.(a.) If Patrick was on the cash basis of accounting at the date of his death, how muchincome would be included on his final income tax return?(b.) Would your answer to (a) change if Patrick was on the accrual basis of accountingat the date of his death?(c.) If Patrick does not recognize all of the interest income on his final income tax retunin part (a) or (b), who would recognize the income?

Interest income refers to the amount which is to be paid to an entity for lending its money or for…

Answered: a.) If Patrick was on the cash basis of…

a.) If Patrick was on the cash basis of accounting at the date of his death, how much ncome would be included on his final income tax return?

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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Question

Patrick King dies on January 15, 2021. On the date of his death, Patrick had a bank account
which pays interest on a quarterly basis. On March 31, 2021, $12,000 of interest
income is credited to Patrick's bank account.
(a.) If Patrick was on the cash basis of accounting at the date of his death, how much
income would be included on his final income tax return?
(b.) Would your answer to (a) change if Patrick was on the accrual basis of accounting
at the date of his death?
(c.) If Patrick does not recognize all of the interest income on his final income tax retun
in part (a) or (b), who would recognize the income?

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