Peggy Is in the Business of Factoring Accounts Receivable

question 43

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 $18,000.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 $7,000 for the current year.
• C)$7,000 for the current year.
• D)$12,000 for the current year.
• E)None of the above.