On August 1 of this year, Sharon, a cash-method taxpayer, signs a lease for office space and begins business. The lease is for 3 years. At the time the lease is signed, Sharon pays the $12,600 rent for the entire 36-month lease term. How much can Sharon deduct this year?
A) $350
B) $1,750
C) $5,950
D) $12,600
B) $1,750
The prepaid rent is considered a capital expenditure and must be amortized over the period benefitted. ($12,600/36) × 5 = $1,750
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Abilene Western Shop began business on January 1, 2016 . The corporate charter authorized issuance of 10,000 shares of $2 par value common stock and 4,000 shares of $8 par value, 6% cumulative preferred stock. Abilene issued 2,400 shares of common stock for cash at $20 per share on January 2, 2016 . What effect does the entry to record the issuance of stock have on total stockholders' equity?
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A company invests excess cash in a certificate of deposit. At the end of an accounting period before the CD matures, the company will recognize interest expense
a. True b. False Indicate whether the statement is true or false
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