Question

Ron, age 19, is a full-time graduate student at City University. During 2014, he received the following payments:

Cash award for being the outstanding resident adviser $ 1,500
Resident adviser housing 2,500
State scholarship for ten months (tuition and books) 6,000
State scholarship (meals allowance) 2,400
Loan from college financial aid office 3,000
Cash support from parents 2,000
$17,400
Ron served as a resident advisor in a dormitory and, therefore, the university waived the $2,500 charge for the room he occupied. What is Ron's adjusted gross income for 2014?
a. $1,500.
b. $3,900.
c. $9,000.
d. $15,400.
e. None of these.

Answer 1

Ron's adjusted gross income for 2014 is $14,900.

The correct option is e.

Step-by-step explanation:

To calculate Ron's adjusted gross income, we need to consider the components that contribute to adjusted gross income. Adjusted gross income is calculated by taking gross income and subtracting certain allowable deductions.

The components of Ron's gross income are as follows:

1. Cash award for being the outstanding resident adviser: $1,500

2. Resident adviser housing (waived by the university): $2,500 (This is not included in adjusted gross income because it's waived, so it doesn't count as income.)

3. State scholarship for ten months (tuition and books): $6,000

4. State scholarship (meals allowance): $2,400

5. Loan from college financial aid office: $3,000

6. Cash support from parents: $2,000

Now, let's calculate Ron's adjusted gross income:

1,500 + 6,000 + 2,400 + 3,000 + 2,000 = 14,900

So, Ron's adjusted gross income for 2014 is b. $14,900.

The correct option is e.