The Following Amounts Were Reported on the December 31, 2019

question 39

Multiple Choice

The following amounts were reported on the December 31, 2019, balance sheet: $$\begin{array} { l r } \text { Cash } &\$ 8,000 \\\text { Land } & 20,000 \\\text { Accounts payable } & 15,000 \\\text { Bonds payable } & 120,000 \\\text { Merchardise irventory } & 30,000 \\\text { Retained earnirgs } & 80,000 \\\text { Buildings and equipment, net of accumulated depreciation } & 180,000 \\\text { Accounts receivable } & 22,000 \\\text { Common stock } & 40,000 \\\text { Wages payable } & 5,000\end{array}$$ Working capital at December 31, 2019 was:

• A)$10,000.
• B)$40,000.
• C)$60,000.
• D)$120,000.

---

Definitions:

Deduction

An expense that can be subtracted from gross income to reduce the taxable income.

Imputed Interest Rules

Regulations set by the IRS to assign a reasonable interest rate to financial transactions that do not state their own interest or whose interest is deemed insufficient.

Sale of Property

The act of transferring ownership of real estate or personal property from one entity to another, often resulting in capital gains or losses for tax purposes.

Personal Residence

A dwelling in which an individual lives for a significant part of the year, considered as their main place of residence.