Randolph Borrows $100,000 from His Uncle's Bank and Invests the Proceeds

question 109

Multiple Choice

Randolph borrows $100,000 from his uncle's bank and invests the proceeds in various corporate bonds.He pays $9,000 in interest on the loan during the current year.The bonds produce $7,200 of interest income.Randolph reports adjusted gross income of $100,000 in the current year.If the interest income is his only investment income,how much of the interest expense is deductible by Randolph?

• A)$7,000
• B)$7,200
• C)$9,000
• D)None of this interest is deductible.

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Definitions:

Responsibility Reports

Reports designed to evaluate the financial performance of different segments of an organization, focusing on areas under a manager's control.

Direct Fixed Costs

Expenses that remain relatively constant regardless of the level of production or sales volume and are directly tied to the product or service.

Traceable Costs

Direct costs associated with a specific product, department, or segment that can be directly attributed to that area.

Budget Reports

Financial documents that outline the planned versus actual revenue and expenses over a period.