Problem 4-15 (Algorithmic) (LO. 2)

Al is a physician who conducts his practice as a sole proprietor. During 2019, he received cash of $505,200 for medical services. Of the amount collected, $51,600 was for services provided in 2018. At the end of 2019, Al held accounts receivable of $91,400, all for services rendered in 2019. In addition, at the end of the year, Al received $9,000 as an advance payment from a health maintenance organization (HMO) for services to be rendered in 2020.

a. Compute Al's gross income for 2019 using the cash basis of accounting. $___________

b. Compute Al's gross income for 2019 using the accrual basis of accounting. $____________

Problem 4-33 (LO. 10)

Apply the imputed interest rules in the following situations. If an amount is zero, enter "0".

a. Mike loaned his sister Shonda $90,000 to buy a new home. Mike did not charge interest on the loan. The Federal rate was 4%. Shonda earned $900 of investment income for the year.

The imputed amount is $ _______________

b. Nico's employer maintains an emergency loan fund for its employees. During the year, Nico's wife was very ill, and they incurred unusually large medical expenses. He borrowed $8,500 from his employer's emergency loan fund for six months. The Federal rate was 4%. Nico and his wife earned no investment income for the year.

The imputed amount is $ ________________

c. Jody borrowed $25,000 from her controlled corporation for six months. She used the funds to pay her daughter's college tuition. The corporation charged Jody 3% interest. The Federal rate was 4%. Jody earned $3,500 of investment income for the year.

The imputed amount is $ ________________

d. Kait loaned her son, Jake, $60,000 for six months. Jake used the $60,000 to pay off college loans. The Federal rate was 4%, and Kait did not charge Jake any interest. Jake earned dividend and interest income of $2,100 for the tax year.

The imputed amount is $ _______________