Ron and Tom Are Equal Owners in Robin Corporation

question 78

Multiple Choice

Ron and Tom are equal owners in Robin Corporation.On July 1,2011,each loans the corporation $20,000 at annual interest of 10%.Ron and Tom are brothers.Both shareholders are on the cash method of accounting,while Robin Corporation is on the accrual method.All parties use the calendar year for tax purposes.On June 30,2012,Robin repays the loans of $40,000 together with the specified interest of $4,000.How much of the interest can Robin Corporation deduct in 2011?

• A) $0.
• B) $1,000.
• C) $2,000.
• D) $4,000.
• E) None of the above.

---

Definitions:

Legends

Explanatory notes or keys included in maps, charts, or diagrams to help interpret the symbols or data presented.

Titles

Formal or official designations given to individuals, works of art, or positions to denote status or function.

Documentation

The written or printed material that provides official information or evidence or that serves as a record.

Visual

Pertaining to sight or the ability to see, often used in the context of graphical or pictorial representation of information or concepts.