Far and Carley had a tech business. After two unprofitable years, the business closed. At that point, the liabilities of the business were $100,000 larger than its assets. Under each separate situation, how much money (if any) can creditors take from Carley's personal assets to pay the unpaid business debts? a. The business is set up as a limited liability company (LLC). b. The business is set up as an S corporation.

Far and Carley had a tech business. After two unprofitable years, the business closed. At that point, the liabilities of the business were $100,000 larger than its assets. Under each separate situation, how much money (if any) can creditors take from Carley's personal assets to pay the unpaid business debts? a. The business is set up as a limited liability company (LLC). b. The business is set up as an S corporation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

15. The following are examples of corporate expenses deductible from gross income, which of the following is not? Group of answer choices a. Representation expenses incurred by Nicanor for ABC Corporation to promote the latter’s business. d. Premiums on life insurance paid by QRS Corporation covering the life of its president if the beneficiary is his heirs. b. XYZ Corporation, a domestic manufacturer of beer, to drum up business it contributes its beer products to barrio fiestas. c. Expenses paid by GHI Corporation to an advertising firm in order to create a favorable image for the corporation.
T2.
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: 24,200 Adjusted Tax Basis $ 24,000 Appreciation Cash FMV $ 24,000 Receivables 24,200 Building 112,000 56,000 56,000 Land 238,500 79,500 159,000 Total $ 398,700 $ 183,700 $ 215,000 Payables Mortgage* $ 25,600 128,300 $ 25,600 128,300 Total $ 153,900 $ 153,900 *The mortgage is attached to the building and land. Ernesto was asking for $504,100 for the company. His tax basis in the BLI stock was $144,000. Included in the sales price was an unrecognized customer list valued at $183,000. The unallocated portion of the purchase price ($76,300) will be recorded as goodwill. Note: Negative amounts should be indicated by a minus sign. a. What amount of gain or loss does BLI recognize if the…
Cude Corp., a start‑up company, uses the accrual basis of accounting. In Year 1, Cude provided services that were acceptable to its customers and billed those customers for $620,000. However, Cude collected only $520,000 cash in Year 1, and the remaining $100,000 was collected in Year 2. Cude’s employees earned $300,000 in Year 1 wages that were not paid until the first week of Year 2. Based only on this information, how much net income does Cude report for Year 2?
! Required information [The following information applies to the questions displayed below.] The partnership of Garcia, Iglesias, and Kassabian was formed several years ago as a local tax preparation firm. Two partners have reached retirement age, and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $44,000 are expected. The partnership balance sheet at the start of liquidation is as follows: Cash Accounts receivable Office equipment (net) Building (net) Land Total assets Liabilities Garcia, loan $ 180,000 40,000 100,000 40,000 120,000 $ 40,000 70,000 60,000 Garcia, capital (25%) 160,000 150,000 $ 480,000 Total liabilities and capital $ 480,000 Iglesias, capital (25%) Kassabian, capital (50%) Required: Prepare a predistribution plan for this partnership. Garcia, Loan and Capital Iglesias, Capital Kassabian, Capital Beginning balances $ 140,000 $ 40,000 $ 120,000 Assumed loss of Schedule 1 40,000 40,000 (80,000) Step one balances $…
Mullins Corp., a start‑up company, uses the accrual accounting method. In Year 1, Mullins provided services that were acceptable to its customers and billed those customers for $620,000. However, Mullins collected only $520,000 cash in Year 1, and the remaining $100,000 was collected in Year 2. Mullins’ employees earned $300,000 in Year 1 wages that were not paid until the first week of Year 2. Based only on this information, how much net income does Mullins report for Year 2?
RAMI has owned and operated a proprietorship for several years. On January 1, 2018, he decides to terminate this business and become a partner in the firm of ASMA and RAMI. ✓ RAMI's investment in the partnership consists of HK$ 140,000 in CASH, and the following assets of the proprietorship: ✔ ACCOUNTS RECEIVABLE HK$130,000 less allowance for doubtful accounts of HK$20,000, ✓ and EQUIPMENT HK$200,000 less accumulated depreciation of HK$45,000. It is agreed that the allowance for doubtful accounts should be HK$28, 000 for the partnership. The fair value of the equipment is HK$175, 500. ASMA brings with her $200,000 Book value in CASH, $ 280,000 Fair value. on Dec. 31, 2018, the net income was $100,000 and the income ratios are RAMI 70%, ASMA 30%. Prepare the journal entry to record the division of the net income. Instructions Journalize RAMI's admission to the firm of ASMA and RAMI.
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Incorporated (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company’s tax accounting balance sheet. The relevant information is summarized as follows: Note: Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign. FMV Adjusted Tax Basis Appreciation Cash $ 10,000 $ 10,000 Receivables 15,000 15,000 Building 100,000 50,000 50,000 Land 225,000 75,000 150,000 Total $ 350,000 $ 150,000 $ 200,000 Payables $ 18,000 $ 18,000 Mortgage* 112,000 112,000 Total $ 130,000 $ 130,000 * The mortgage is attached to the building and land. Ernesto was asking for $400,000 for the company. His tax basis in the BLI stock was $100,000. Included in the sales price was an unrecognized customer list valued at $100,000. The unallocated portion of the purchase price…
In the following case, identify all the violations of the rules of conduct of the Code of Professional Ethics, indicate the rule and explain why it was violated. Carmen and Carlos formed a corporation called CPA al servicio. 50% of all issued shares are divided between the two owner shareholders. Carmen in CPA and member of the AICPA Carlos is an appraiser. They announce themselves as members of the AICPA. They were hired to do an audit, the payment of which will be based on the findings of the CPA. Carmen commented with another CPA colleague on important aspects of the case to be audited. During the audit Carmen found deviations from the Generally Accepted Accounting Principles. Carmen gave an opinion in the report of her "unqualified without qualification."102 Integrity and objectivity } 201 General standards } 202 Compliance with standards } 203 Accounting Principles } 301 Confidential customer information } 302 Contingency expenses } 501 Acts of discredit } 502 Promotion or…
In the past several years, Shakira had loaned money to Shakira Incorporated (an S corporation) to help the corporation keep afloat in a downturn. Her stock basis in the S corporation is now $0, and she has deducted $42,750 in losses, reducing her debt basis from $142,500 to $99,750. Things appear to be turning around this year, and Shakira Incorporated repaid Shakira $28,500 of the $142,500 outstanding loan. What is Shakira's income, if any, on the partial loan repayment?
Hans runs a sole proprietorship. Hans has reported the following net §1231 gains and losses since he began business. Net §1231 gains shown are before the look-back rule. Note: Leave no answers blank. Enter zero if applicable. Year Net §1231 Gains/(Losses) Year 1 $ (68,000) Year 2 16,500 Year 3 0 Year 4 0 Year 5 11,200 Year 6 0 Year 7 (current year) 51,500 a. What amount, if any, of the year 7 (current year) $51,500 net §1231 gain is treated as ordinary income?
Amy and Brian were investigating the acquisition of a tax accounting business, Bottom Line Inc. (BLI). As part of their discussions with the sole shareholder of the corporation, Ernesto Young, they examined the company's tax accounting balance sheet. The relevant information is summarized as follows: FMV Adjusted Basis Appreciation Cash $ 14,500 $ 14,500 Receivables 18,800 18,800 Building 102,500 51,250 51,250 Land 260,250 86,750 173,500 Total $ 396,050 $ 171,300 $ 224,750 Payables $ 19,100 $ 19,100 Mortgage* 159,000 159,000 Total $ 178,100 $ 178,100 * The mortgage is attached to the building and land. Ernesto was asking for $445,700 for the company. His tax basis in the BLI stock was…