Four Unrelated,calendar Year Corporations Are Formed on January 1,2016,and Have

question 188

Essay

Four unrelated,calendar year corporations are formed on January 1,2016,and have the following qualified organizational expenditures: $4,000 for Rust Corporation;$15,000 for Orange Corporation;$53,000 for Pearl Corporation;and $56,000 for Chestnut Corporation.What is the maximum deduction each can claim for 2016?

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Definitions:

Net Credit Sales

The net income generated from credit sales after subtracting any returns or allowances.

Aging Analysis

A method used to estimate the collectability of accounts receivable by categorizing receivables by their age (time outstanding).

Uncollectible Accounts Expense

An expense account reflecting the cost of accounts receivable that a company does not expect to collect.

Allowance for Doubtful Accounts

A contra asset account that reduces the total amount of accounts receivable on the balance sheet to reflect the likelihood of some accounts being uncollectible.