QUESTION 20 Julia is a cash basis veterinarian in a rural midwest town. During 2
ID: 2409031 • Letter: Q
Question
QUESTION 20 Julia is a cash basis veterinarian in a rural midwest town. During 2018, she was paid the following for services rendered in 2018 Cash of $400 that she has not yet deposited in the bank - A well-used motorcycle with a market value of $250 that was not working when Julia received it. She spent an additional $300 on repairs and now rides the bike from time to time. Tickets to Midwest University's homecoming football game worth $50 with a face value (cost) of $70. Checks worth $700 that Julia has not cashed yet. - A check from one customer for $150 (not included in the $700 above) that was post-dated into next year. Julie did not notice the date and cashed it anyway with no issues. - Chickens worth $400 An accounts receivable" at year end of $4,300 from a giant agriculture corporation that Julia agreed to bill every three months because they are such a large customer. At year-end, Julia was fairly certain she'd collect but the corporation actually went bankrupt in 2019 and Julia never collected. How much gross inome from these items must Julia recognize in 2018? $1,950 $2.250 s6100 $6.250 None of the choices are correctExplanation / Answer
Answer is $1,950.
Working:
Since the accounts receivable was not collected , this cannot be considered, as Julia is a cash basis tax payer.
Cash received not deposited 400 Fair value of motor cycle 250 Ticket for football game 50 Checks received but not deposited 700 Check received and cashed 150 Chicken 400 Total 1950