In year 1, Kris purchased a new home for $200,000 by making a down payment of $150,000 and financing the remaining $50,000 with a loan, secured by the residence, at 6 percent. As of January 1, year 4, the outstanding balance on the loan was $40,000. On January 1, year 4, when his home was worth $300,000, Kris refinanced the home by taking out a $150,000 mortgage at 5 percent. With the loan proceeds, he paid off the $40,000 balance of the existing mortgage and used the remainder for purposes unrelated to the home. During year 4, he made interest only payments on the new loan of $7,500. What amount of the $7,500 interest expense on the new loan can Kris deduct in year 4 on the new mortgage as home related interest expense?
a. $2,000
b. $5,000
c. $7,000
d. $7,500
Compute the average days in inventory ratio using the following information: Net sales is $200,000 for the year, cost of goods sold are $80,000, last year's total assets were $900,000, and this year's total assets are $1,100,000. Receivables for both years are $40,000. Inventory changed from $30,000 last year to $10,000 this year.
Harrison Recyclers Company uses the indirect method to prepare its statement of cash flows. Refer to the following information for 2017:
1. Retained Earnings, beginning balance, $142,000
2. Retained Earnings, ending balance, $122.000
3. There is a net loss of $14,000 for the year.
What is the amount of dividends declared during the year?
A. $7,000
B. $6,000
C. $16,000
D. $34,000
