QuestionQuestion 1.1. (TCO 2) On June 30, 20X2, Jill, a cash basis taxpayer, gave Tina a bond with a $25,000 face amount that pays $2,500 interest each December 31. When Tina collected the interest on December 31, 20X2, _____. (Points : 2)Jill must include all of the interest in her gross incomeTina must include all of the interest in her gross incomeJill must report $1,250 interest income, and Tina must report $1,250 interest incomeJill must recognize $1,250 of interest income at the time of the giftTina must recognize $25,000 of income at the time of the giftQuestion 2.2. (TCO 3) Roger, age 19, is a full-time student at State College and a candidate for a bachelor’s degree. During 20X2, he received the following payments.State scholarship for 10 months (tuition and books) $3,600Loan from college financial aid office $1,500Cash support from parents $3,000Interest on CDs $1,700Cash prize awarded in contest $500What is Roger’s adjusted gross income for 20X2? (Points : 2)$1,700$2,200$5,800$10,300None of the aboveInterest on CDs $1,700Cash prize awarded in contest $500Gross income =$2,200Question 3.3. (TCO 3) Determine which statements are true given the following information.Floral Company owed $100,000 to the National Bank.If Floral transfers land with a cost of $60,000 in payment of the debt, then Floral must recognize $40,000 income.If Floral pays the bank $60,000 in settlement of the liability, then Floral has $40,000 income from discharge of indebtedness.If Floral pays the bank $60,000 in settlement of the liability and Floral is insolvent, then Floral can elect to reduce its basis in assets by $40,000 (in lieu of recognizing $40,000 gain).(Points : 2)I, II, and III are true.I, II, and III are false.I and II are true; III is false.II and III are true; I is false.None of the aboveQuestion 4.4. (TCO 3) Mallard Auto Parts Inc. has 1,000 fenders for 1953 Studebakers on hand. Mallard purchased the fenders in 1965 for $30 each, and the selling price is $400 each. Only rarely does Mallard sell a Studebaker fender, and it is highly unlikely that more than 100 of the remaining fenders will ever be sold. But Mallard has ample storage space and feels an obligation to Studebaker owners. Therefore, the company will not salvage the fenders and will continue to sell them for $400 each. Scrap value of the fenders is $5 each. Under the lower-of-cost-or-market inventory method, _____. (Points : 2)Mallard can expense the 900 excess fendersMallard can expense all 1,000 of the fenders because of the unlikelihood that they will be soldthe fenders should be valued at $7,500 ([100 × $30] + [900 × $5])the fenders should be valued at $5,000 (1,000 × $5)None of the aboveQuestion 5.5. (TCO 7) Martha participated in a qualified tuition program for the benefit of her son. She invested $5,000 in the fund. 4 years later, her son withdrew $7,500, the entire balance in the program, to pay his college tuition. (Points : 2)Martha must include the $2,500 ($7,500 – $5,000) in her gross income when the funds are used to pay the tuition.Martha must include the portion of the $2,500 accumulated each year in her gross income (i.e., interest).Martha’s son must include the $2,500 ($7,500 – $5,000) in his gross income when the funds are used to pay the tuition.Martha’s son must include the portion of the $2,500 accumulated each year in his gross income (i.e., interest).None of the aboveQuestion 6.6. (TCO 7) Generally, deductions for additions to reserves (e.g., an allowance for estimated warranty costs) are not allowed for income tax purposes because allowing the deduction would _____. (Points : 2)result in a mismatching of revenues and expensesviolate the doctrine of constructive receiptreduce the costs of companies selling defective productsviolate the economic performance requirementNone of the aboveQuestion 7.7. (TCO 7) Hal sold land held as an investment with a fair market value of 3 pgs,Business & Finance,,

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