Self-Study Problem 3.12Kana is a CPA who loves chinchillas. She breeds chinchillas as pets (she currently owns 13 of them) and every so often sells a baby chinchilla to a suitable family to keep as a pet. In the current year, she sells $250 worth of chinchillas and incurs the following expenses:Line Item DescriptionAmountChinchilla cages$300Advertising for chinchilla sales$2,500This activity is considered a hobby. Kana has adjusted gross income of $72,000. What is the amount of income and expense Kana recognizes (assume she itemizes deductions) associated with her chinchilla hobby? If an amount is zero, enter "0".Line Item DescriptionAmountIncome250Deduction

The amounts Kana recognizes are:Line Item Description AmountIncome $250Deduction $250Explanation:…

Answered: Self-Study Problem 3.12 Kana is a CPA…

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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Self-Study Problem 3.12

Kana is a CPA who loves chinchillas. She breeds chinchillas as pets (she currently owns 13 of them) and every so often sells a baby chinchilla to a suitable family to keep as a pet. In the current year, she sells $250 worth of chinchillas and incurs the following expenses:

Line Item Description	Amount
Chinchilla cages	$300
Advertising for chinchilla sales	$2,500

This activity is considered a hobby. Kana has adjusted gross income of $72,000. What is the amount of income and expense Kana recognizes (assume she itemizes deductions) associated with her chinchilla hobby? If an amount is zero, enter "0".