Winnie Made a $70,000 Interest-Free Loan to Her Son,Tod,who Used

question 6

Essay

Winnie made a $70,000 interest-free loan to her son,Tod,who used the money to retire a mortgage on his personal residence.Tod's only source of income was salary of $35,000 and $990 interest income on a savings account.The relevant Federal interest rate was 5% and the loan was outstanding all year long.
What amount must Winnie include as interest income as a result of this transaction?

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Definitions:

Minimum Points

The lowest scores or levels that must be achieved in a particular framework, often used in educational or competitive contexts.

Maximum Points

Refers to the highest value or peak point that can be achieved within a given set of parameters or conditions.

Total Economic Profit

The sum of accounting profit and economic profit, which measures the total earnings of a company after accounting for both explicit and implicit costs.

Profitable Level

The point at which the revenue from sales exceeds the costs involved in production or procurement.