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During 2011, Becky loans her brother Ken 5000, which he intends to use to establish a small business. Because Ken has no other assets and needs the cash to expand the business, the agreement provides that Ken will repay the debt if (and when) sufficient funds are generated from the business. No interest rate is agreed upon. The business sins unsuccessful, and Ken is forced to file for bankruptcy in 2012. By the end of 2012 it is estimated that the creditors will receive only 20% of the amount owed. In 2013 the bankruptcy proceedings are closed, and the creditors receive 10% of the amount due on the debt. What is Becky's bad debt deduction for 2012? For 2013?

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Accounting Basics, Accounting

Category:- Accounting Basics
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