Question

Vera has a key supplier for her business who was facing cash flow problems which would impair Vera's ability to get shipments of key components for her production. Vera made a $10,000 loan to the supplier. Unfortunately the supplier filed for bankruptcy and has gone out of business without repaying Vera. Vera will be able to recognize a loss of A) $10,000. B) $3,000. C) $7,000. D) 0.

Answer 1

A) $10,000

Step-by-step explanation:

Since in the question it is mentioned that for $10,000 the loan made to supplier and the supplier filed for bankruptcy and go out from the business without paying off any money

So in this case the loss would be $10,000 i.e equal to the loan amount amde to the supplier as the non payment is also represents the bad debt and the same is allowed for the deduction

Hence, the first option is correct