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Linda_us, Finance, Accounts & Homework Tutor
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Red Corporation incurred a $12,000 bad debt last year. Red

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Red Corporation incurred a $12,000 bad debt last year. Red Corporation also had an $8,000 long-term capital gain last year. Red’s taxable income for last year was $28,000. During the current year, Red Corporation, unexpectedly, collected $5,000 on the debt. How should Red Corporation account for the $5,000 collection?

1. $0 income.

2. $5,000 income.

3. $4,000 income.

4. None of the above.

5. $3,000 income.
Submitted: 8 years ago.
Category: Homework
Expert:  Linda_us replied 8 years ago.

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