Juanita,who Is Single,is in an Automobile Accident in 2014 and Her

question 95

Multiple Choice

Juanita,who is single,is in an automobile accident in 2014 and her car sustains $6,200 in damages.Because both drivers received tickets in the accident,Juanita does not expect to recover any of the loss from her insurance company.Juanita's 2014 AGI is $31,000,and she deducts a $3,000 loss on her 2014 tax return.Her other itemized deductions in 2014 exceed $12,000.In 2015,Juanita's insurance company reimburses her $2,800.Juanita's 2015 AGI is $28,000.As a result,Juanita must

• A)amend 2014 to show a $200 loss.
• B)do nothing and simply keep the $2,800.
• C)do nothing to the 2014 return but report $2,800 of income on her 2015 return.
• D)amend the 2014 return to show $0 loss and file her 2015 return to show a $200 loss.

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Definitions:

Receivables Financing

A form of financing where a company uses its accounts receivable as collateral to secure funding from a financial institution.

Maturity Date

The specific date on which a financial instrument (like a bond or loan) becomes due for payment of principal and interest.

Installment Accounts

Installment accounts are credit accounts where the borrower repays the loan amount plus interest in regular payments over a set period.

Allowance Method

The allowance method is an accounting technique used to account for bad debts by estimating uncollectible accounts and reflecting them as an allowance for doubtful accounts on the balance sheet.