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Sandra, a cash-basis taxpayer, operated a pet store on the cash method of accounting. She lent $4,500 to a friend but then forgave the loan. She also wrote off an account receivable of $2,200 that became uncollectible. She had to pay $8,000 on a supplier’s debt that she guaranteed in order to maintain a source of inventory. What is Sandra’s business bad debt expense?   (a)  $2,200   (b)  $4,500   (c)  $8,000   (d)  $10,200   Choose the correct answer and defend your choice in 2-3 sentences.

Sandra, a cash-basis taxpayer, operated a pet store on the cash method of accounting. She lent $4,500 to a friend but then forgave the loan. She also wrote off an account receivable of $2,200 that became uncollectible. She had to pay $8,000 on a supplier’s debt that she guaranteed in order to maintain a source of inventory. What is Sandra’s business bad debt expense?   (a)  $2,200   (b)  $4,500   (c)  $8,000   (d)  $10,200   Choose the correct answer and defend your choice in 2-3 sentences.

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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Sandra, a cash-basis taxpayer, operated a pet store on the cash method of accounting. She lent $4,500 to a friend but then forgave the loan. She also wrote off an account receivable of $2,200 that became uncollectible. She had to pay $8,000 on a supplier’s debt that she guaranteed in order to maintain a source of inventory. What is Sandra’s business bad debt expense?

 

(a)  $2,200

 

(b)  $4,500

 

(c)  $8,000

 

(d)  $10,200

 

Choose the correct answer and defend your choice in 2-3 sentences.

 

 

 

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