Peggy Is in the Business of Factoring Accounts Receivable

question 105

Multiple Choice

Peggy is in the business of factoring accounts receivable.Last year, she purchased a $30,000 account receivable for $25,000.This year, the account was settled for $25,000.How much loss can Peggy deduct and in which year?

• A)$5,000 for the current year.
• B)$5,000 for the prior year and $5,000 for the current year.
• C)$5,000 for the prior year.
• D)$10,000 for the current year.
• E)None of these.

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