Harold bought land from jewel for $150,000. harold paid $50,000 cash and gave jewel an 8% note for $100,000. the note was to be paid over a five-year period. when the balance on the note was $80,000, jewel began having financial difficulties. to accelerate her cash inflows, jewel agreed to accept $60,000 cash from harold in final payment of the note principal. a. harold must recognize $20,000 ($80,000 - $60,000) of gross income.

b. harold is not required to recognize gross income, but must reduce his cost basis in the land to $130,000.

c. harold is not required to recognize gross income, since he paid the debt before it was due.

d. jewel must recognize gross income of $20,000 ($80,000 - $60,000) from discharge of the debt.

e. none of these.

Salt corporation's contribution margin ratio is 78% and its fixed monthly expenses are $30,000. assume that the company's sales for may are expected to be $89,000. required: estimate the company's net operating income for may, assuming that the fixed monthly expenses do not change.

Ursus, inc., is considering a project that would have a five-year life and would require a $1,650,000 investment in equipment. at the end of five years, the project would terminate and the equipment would have no salvage value. the project would provide net operating income each year as follows (ignore income taxes.):

Analyzing and computing accrued warranty liability and expense waymire company sells a motor that carries a 60-day unconditional warranty against product failure. from prior years' experience, waymire estimates that 2% of units sold each period will require repair at an average cost of $100 per unit. during the current period, waymire sold 69,000 units and repaired 1,000 units. (a) how much warranty expense must waymire report in its current period income statement? (b) what warranty liability related to current period sales will waymire report on its current period-end balance sheet? (hint: remember that some units were repaired in the current period.) (c) what analysis issues must we consider with respect to reported warranty liabilities?