Jonathon, Age 50 and in Good Health, Withdrew $6,000 from His

question 911

Multiple Choice

Jonathon, age 50 and in good health, withdrew $6,000 from his pension plan during the current year. The withdrawal was not eligible for any exception to the 10% penalty. Jonathon had made $40,000 of after- tax contributions to the plan while his employer had contributed $80,000. In addition to relevant income taxes, how much penalty must Jonathon pay?

• A) $200
• B) $0
• C) $600
• D) $400

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Definitions:

Finished Goods Inventory

Manufactured goods that are complete and ready for sale.

Lower of Cost

A principle typically applied in the valuation of inventory and financial assets, stating to record the asset at the lower of its historical cost or current market value.

Net Realizable Value

The estimated selling price in the ordinary course of business, minus the estimated costs of completion and the necessary costs to make the sale.

Inventory

The raw materials, work-in-progress products, and finished goods considered to be the part of a business's assets that are ready or will be ready for sale.