A shareholder loaned $100,000 to the S Corp in TY2021 which was repaid in TY2022. Discuss the appropriate recording of the loan transactions for both years and the effect on shareholder basis for both years. State the applicable rules that apply to this situation.
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A shareholder loaned $100,000 to the S Corp in TY2021 which was repaid in TY2022. Discuss the appropriate recording of the loan transactions for both years and the effect on shareholder basis for both years. State the applicable rules that apply to this situation.
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- Hh2. AccountA Corporation is engaged in the trading business. The reported income and expenses for taxable year 2019 show: Sales P10,000,000 cost of sales 6,000,000 general business expenses 1,000,000 Interest on time deposit (gross) 100,000 Interest expense on loans payable 180,000 The net taxable income is A. 2,820,000 B. 2,853,000 C. 2,862,000 D. 2,858,000Subject: acounting
- X-Rays was organized in January 2019 as a corporation in the jurisdiction of Puerto Rico. During 2020, the taxable (natural) year, it obtained the following results under the accumulation method (“accrual”) ended on December 31, 2020. Income Services $ 425,000 Dividends 28,000 Total $ 453,000 Expenses Administration 275,000 Food 12,000 Entertainment 10,000 Depreciation 10,000 Data: Dividend income comes from a domestic corporation in Puerto Rico where X-Rays owns 12% of the common stock. The corporation generated a net operating loss of $ 200,000 in 2019. The depreciation claimed under GAAP is equal to the depreciation granted for taxes. Determine the net taxable income (loss) of X-Rays as of December 31, 2020 in Puerto Rico.During year 1, Jenny Company engaged in the following transactions. How much would be disclosed as related-party transactions in Jenny's year 1 financial statements? * Salary expense to key employees who are also principal owners P100,000 Sales to affiliated enterprises P250,000 Your answer Pat Company reported the following information on December 31, 2020. Determine the legal capital: Preference Share, P100 par Share Premium - Preference Ordinary Share, P15 par Share Premium -Ordinary Subscribed Ordinary Share Retained Earnings Notes Payable Subscription receivable-Ordinary P230,000 80,500 525,000 275,000 5,000 190.000 400,000 40,000An entity was incorporated on January 1, 2020 with proceeds from the issuance of P5,000,000 in shares and borrowed funds of P1,000,000. During the first year of operations, revenue from sales amounted to P8,000,000 and operating costs and expenses totaled P6,000,000. On December 15, the entity declared a P500,000 cash dividend, payable to shareholders on January 15, 2021. No additional activities affected owners’ equity in 2020. The liabilities increased to P1,800,000 by December 31, 2020. What amount should be reported as total assets on December 31, 2020?
- Can you please help me find what amount should be reported as income before tax in the financial statements? 1. The financial statements of Kare-Kare Company for the calendar year ending December 31, 2021 are authorized for issue on March 30, 2022. Income before tax was computed at P50,000,000 before the following events occurred in the company: a. The company had investments in shares held for trading which were recorded at the fair value of P600,000 on December 31, 2021. During the period up to March 1, 2022, there was a steady decline in the fair value of all the shares in the portfolio, and on March 1, 2022, the fair value had fallen to P500,000. b. A customer owing the company P300,000 filed for bankruptcy on February 2, 2022. The company included in its financial statements an allowance for doubtful accountsp ertaining to this customer of P100,000. c. A shipping vessel of the company with a carrying amount of P10,000,000 was destroyed at sea because of the missile fired by the…Alaska Inc. is an accrual-basis C corporation that was incorporated on January 1, Year 1. At the end of Year 2, the corporation is considering converting to an S corporation. Alaska is required to determine its accumulated earnings and profits prior to conversion. The company has already calculated book net income, taxable income, and prior-year accumulated earnings and profits, and is now attempting to calculate the company's current earnings and profits. In Year 4, Alaska is still a C corporation. Accumulated earnings and profits at the end of Year 3 were $61,000. Current earnings and profits for Year 4 are $24,000. During Year 4, Alaska made two distributions on the dates indicated in column A of the table below. Allocate the distributions indicated in column B among columns C, D, and E. Round all answers to the nearest dollar. 1 2 3 4 A Distribution Dates 3/31/Yr 4 9/30/Yr 4 Totals B Distribution Amounts $58,000 $33,000 $91,000 с Current E&P 123 123 $0 D Accumulated E&P at 12/31/Yr…Timpanogos Incorporated is an accrual-method, calendar-year corporation. For 2021, it reported financial statement income after taxes of $1,529,880. Timpanogos provided the following information relating to its 2021 activities: $ 228,000 2,280,000 23,940 205,200 Life insurance proceeds as a result of CrO's death Revenue from sales (for both book and tax purposes) Premiums paid on the key-person life insurance policies. The policies have no cash surrender value. Qualified charitable contributions Cost of goods sold for book and tax purposes Interest income on tax-exempt bonds Interest paid on loan obtained to purchase tax-exempt bonds Rental income payments received and earned in 2021 Rental income payments received in 2020 but earned in 2021 Rental income payments received in 2021 but not earned by year-end Tax depreciation Book Depreciation Net capita1 loss Federal income tax expense for books in 2021 342,000 45,600 51,300 17,100 11,400 34,200 62,700 28,500 47,880 353,400 Required: a.…
- Which of the following represents a liability? The obligation to pay for goods that an entity expects to order from suppliers in the near future. The obligation to provide goods that customers have ordered and paid for during the current year. The obligation to pay interest on a five-year note payable that was issued the last day of the current year. The obligation to distribute an entity’s own shares next year as a result of a stock/share dividend declared by the board of directors near the end of the current year.A shareholder sells public securities to a corporation, and files a section 85 election to have a transfer/sale price of $60,000. The fair market value (FMV) and adjusted cost base (ACB) of the securities are $220,000 and $60,000 respectively. As consideration for the transfer, the corporation issues a $50,000 note, preference shares worth $150,000 and common shares worth $20,000. What are the tax costs of the various assets to the shareholder? The note - $50,000, the preference shares - $nil, and the common shares $10,000. The note - $50,000, the preference shares - $132,353 ($150,000/$170,000 total share value issued), and the common shares $37,647 ($2,000/$170,000 total share value issued). The note - $60,000, the preference shares - $150,000, and the common shares $10,000. The note - $50,000, the preference shares - $10,000, and the common shares $nil.On January 1, 2021, Entity A and Entity B incorporated AB Company. The contractual agreement provided that the decisions on relevant activities will require the unanimous consent of both Entity A and Entity B, and they will have right to the net assets of AB Company. Entity A and Entity B invested P400,000 and P600,000 respectively, equivalent to 40:60 capital interest of AB Company. The financial statements of AB Company provided the following data for its two-year operation (see image below).1. How much is the balance of Investment in Joint Venture to be reported by Entity B in its Statement of Financial Position at December 31, 2022? 2. How much is the balance of Investment in Joint Venture to be reported by Entity A in its Statement of Financial Position at December 31, 2021? _______________
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