In July, Bruce Leases a Building to Vanessa for a Period

question 102

Multiple Choice

In July, Bruce leases a building to Vanessa for a period of twenty years at a monthly rental of $1,500. As part of the lease agreement, Vanessa pays a $3,000 security deposit. In addition, the lease agreement states that any improvements that Vanessa made to the building become Bruce's property. Prior to moving in on July 1, Vanessa makes improvements to the building at a cost of $13,000. How much gross income does Bruce have from the lease arrangement in the first year of the lease?

• A)$9,000
• B)$12,000
• C)$22,000
• D)$25,000
• E)None of the above.

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Definitions:

Credit

A form of financial arrangement where a borrower receives something of value now and agrees to repay the lender at a later date, typically with interest.

Accounts Receivable Period

Also known as the average collection period, it refers to the average number of days it takes a company to collect payments from its credit sales.

Collecting Receivables

Collecting receivables involves the process or steps taken by a business to ensure that payments are received from customers for goods or services provided on credit.

Cash Cycle

The period of time between a company's purchase of inventory and the receipt of cash from accounts receivable.