Bill Is the Owner of a House with Two Identical $$\begin{array} { l r } \text { Utilities } & \$ 3,600 \\\text { Maintenance and repairs } & 900 \\\text { Insurance } & 500\end{array}$$

question 23

Multiple Choice

Bill is the owner of a house with two identical apartments. He resides in one apartment and rents the other apartment to a tenant. The tenant made timely monthly rental payments of $550 per month for the months of January through December 2019. The following expenses were incurred on the entire building: $$\begin{array} { l r } \text { Utilities } & \$ 3,600 \\\text { Maintenance and repairs } & 900 \\\text { Insurance } & 500\end{array}$$ In addition, depreciation allocable to the rented apartment is $1,500. What amount should Bill report as net rental income for 2019?

• A)$0
• B)$100
• C)$1,400
• D)$2,600
• E)None of these

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Definitions:

Profit and Loss Sharing

An arrangement, often in partnerships, where profits and losses are distributed among parties based on a pre-agreed ratio.

Final Settlement

The process of completing all financial transactions between parties, often referring to the final payment in a contract or dispute resolution.

Capital Accounts

Records reflecting the equity and investment contributions of owners or shareholders in a company, including adjustments for profits or losses.

Schedule of Liquidation

A detailed plan that outlines how a company will sell off its assets and pay off its liabilities before closing.