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On June 2, 2008, Freds TV Sales sold Mark a large HD TV, on

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On June 2, 2008, Fred’s TV Sales sold Mark a large HD TV, on account, for $12,000. Fred’s TV Sales uses the accrual method. In 2009, when the balance on the account was $8,000, Mark filed for bankruptcy. Fred was notified that he could expect to receive 60 cents on the dollar of the amount owed to him. In 2010, final settlement was made and Fred received $5,000. How much bad debt loss can Fred deduct and in which years?

1. 2008—$0; 2009—$8,000.

2. 2008—$12,000.

3. None of the above.

4. 2009—$4,800.

5. 2008—$0; 2009—$3,200; 2010—$0.
Submitted: 7 years ago.
Category: Homework
Expert:  Linda_us replied 7 years ago.

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