**Text Transcription for Educational Website**---This year William provided $4,200 of services to a large client on credit. Unfortunately, this client has recently encountered financial difficulties and has been unable to pay William for the services. Moreover, William does not expect to collect for his services. William has "written off" the account and would like to claim a deduction for tax purposes. *(Leave no answers blank. Enter zero if applicable.)*b. What amount of deduction for bad debt expense can William claim this year if he uses the cash method?[Blue box labeled "Deductible amount"]---**Explanation:**This text describes a scenario in which William is facing a bad debt situation. Under the cash accounting method, revenues are only recognized when cash is actually received. Therefore, for tax deduction purposes, William needs to assess if any part of the $4,200 he expected to receive can be deducted as a bad debt expense. If using the cash method, and since no payment was received, William would typically record the deduction as zero.The blue box is an input field for entering the deductible amount, emphasizing the scenario's application or accounting practice.

Bad debt expenses are the amount of debtors which are not expected to be recovered. It is considered as an expense for the organization and are recorded in the income statement. Since the services are provided on credit basis and nothing is recoverable from the client, the whole amount should be treated as bad debt expense. The bad debt expenses are tax deductible if the company is able to prove that the amount is uncollectible with a rigid evidence. Therefore, the deductible amount will be $4,200.

Business

Accounting

This year William provided $4,200 of services to a large client on credit. Unfortunately, this client has recently encountered financial difficulties and has been unable to pay William for the services. Moreover, William does not expect to collect for his services. William has "written off " the account and would like to claim a deduction for tax purposes. (Leave no answers blank. Enter zero if applicable.) b. What amount of deduction for bad debt expense can William claim this year if he uses the cash method? Deductible amount

This year William provided $4,200 of services to a large client on credit. Unfortunately, this client has recently encountered financial difficulties and has been unable to pay William for the services. Moreover, William does not expect to collect for his services. William has "written off " the account and would like to claim a deduction for tax purposes. (Leave no answers blank. Enter zero if applicable.) b. What amount of deduction for bad debt expense can William claim this year if he uses the cash method? Deductible amount

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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