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Pozzi Company, a cash basis business, received $16,930 cash as payment on a loan Pozzi made to a business associate two years ago. The payment consisted of a $15,000 principal payment and $1,930 interest.
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20 votes
20 votes
Pozzi Company, a cash basis business, received $16,930 cash as payment on a loan Pozzi made to a business associate two years ago. The payment consisted of a $15,000 principal payment and $1,930 interest. On receipt of the cash, Pozzi recognizes: Group of answer choices $1,930 taxable income. $16,930 taxable income. No taxable income. $15,000 taxable income.

User Crgarridos
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1 Answer

21 votes
21 votes

Answer:

$1,930 taxable income

Step-by-step explanation:

Based on the information given On receipt of the cash, Pozzi recognizes the amount of $1,930 TAXABLE INCOME which is the INTEREST amount ($16,930-$15,000) reason been that we were told that the Company received the amount of $16,930 cash payment in which the payment consisted principal payment amount of $15,000 as well as an interest amount of $1,930 interest.

Therefore On receipt of the cash, Pozzi recognizes $1,930 taxable income.

User Freshblood
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