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15 November, 01:19

Perle, a dentist, billed Wood $600 for dental services. Wood paid Perle $200 cash and built a bookcase for Perle's office in full settlement of the bill. Wood sells comparable bookcases for $350. What amount should Perle include in taxable income as a result of this transaction?

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  1. 15 November, 01:28
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    Answer: $550

    Explanation:

    Taxable income could simply be explained as the total income made or received.

    Cash received by Perle = $200

    Worth of Bookcase received by Perle as part of the settlement amount = $350

    Therefore, Total amount received by Perle = $350 + $200 = $550

    Total income received by Perle for dental service rendered = $550

    The total amount to be included in taxable income is $550.

    $600 was the charged amount, but only $550 was received for the service rendered.
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