Barry and Larry,who Are Brothers,are Equal Owners in Chickadee Corporation

question 58

Multiple Choice

Barry and Larry,who are brothers,are equal owners in Chickadee Corporation.On July 1,2013,each loans the corporation $10,000 at an annual interest rate of 10%.Both shareholders are on the cash method of accounting,while Chickadee Corporation is on the accrual method.All parties use the calendar year for tax purposes.On June 30,2014,Chickadee repays the loans of $20,000 together with the specified interest of $2,000.How much of the interest can Chickadee Corporation deduct in 2013?

• A)$0.
• B)$500.
• C)$1,000.
• D)$2,000.
• E)None of the above.

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Definitions:

Elisabeth Kübler-Ross

A psychiatrist known for her pioneering work on death and dying, particularly for developing the five stages of grief model.

Impending Death

The condition of being near the end of one's life, often associated with terminal illness or critical health conditions.

Anger

Anger is a strong feeling of annoyance, displeasure, or hostility.

Elisabeth Kübler-Ross

A psychiatrist known for her groundbreaking work on the five stages of grief: denial, anger, bargaining, depression, and acceptance.