On June 2, 2018, Fred's TV Sales sold Mark a large HD TV on account for $12,000. Fred's TV Sales uses the accrual method. In 2019, when the balance on the account was $8,000, Mark filed for bankruptcy. Fred was notified that he could not expect to receive any of the amount owed to him. In 2020 final settlement was made and Fred received $1,000. How much bad debt loss can Fred deduct in 2020?

Question

Nadia Dillon

Business

20 June, 02:18

On June 2, 2018, Fred's TV Sales sold Mark a large HD TV on account for $12,000. Fred's TV Sales uses the accrual method. In 2019, when the balance on the account was $8,000, Mark filed for bankruptcy. Fred was notified that he could not expect to receive any of the amount owed to him. In 2020 final settlement was made and Fred received $1,000. How much bad debt loss can Fred deduct in 2020?

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Rishi Eaton · Answer 1

0$

Explanation:

On June 2, 2018, Fred's TV Sales sold Mark a large HD TV on account for $12,000. Fred's TV Sales uses the accrual method. In 2019, when the balance on the account was $8,000, Mark filed for bankruptcy. Fred was notified that he could not expect to receive any of the amount owed to him. In 2020 final settlement was made and Fred received $1,000. How much bad debt loss can Fred deduct in 2020

Debt is when a business is owing some money

This business has ran into loss. There was a bad debt recorded in 2019 to the tune of $8000. In 2020, there was a gain instead of a loss

Therefore, to get the balance we say gain minus loss

1000-0

which mens

$1000 gain and no loss in dollar