Round all calculations to the nearest dollar. a. Compute Kunto's gross income from the certificate for 2021. b. Compute Kunto's gross income from the certificate for 2022.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On January 1, 2021, Kunto, a cash basis taxpayer, pays $138,684 for a 24-month certificate of deposit. The certificate is priced to yield 4%
(the effective interest rate) with interest compounded annually. No interest is paid until maturity, when Kunto receives $150,000.
Round all calculations to the nearest dollar.
a. Compute Kunto's gross income from the certificate for 2021.
b. Compute Kunto's gross income from the certificate for 2022.
Transcribed Image Text:On January 1, 2021, Kunto, a cash basis taxpayer, pays $138,684 for a 24-month certificate of deposit. The certificate is priced to yield 4% (the effective interest rate) with interest compounded annually. No interest is paid until maturity, when Kunto receives $150,000. Round all calculations to the nearest dollar. a. Compute Kunto's gross income from the certificate for 2021. b. Compute Kunto's gross income from the certificate for 2022.
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