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J Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 Sales revenue Cost of goods sold Salary to owners Julio and Milania Employee wages Depreciation expense C Year 1 $300,000 (40,000) (40,000) (25,000) (20,000) Year 2 $430,000 (60,000) (80,000) (50,000) (40,000)

J Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 Sales revenue Cost of goods sold Salary to owners Julio and Milania Employee wages Depreciation expense C Year 1 $300,000 (40,000) (40,000) (25,000) (20,000) Year 2 $430,000 (60,000) (80,000) (50,000) (40,000)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Julio and Milania are owners of Falcons Corporation, an S corporation. They each own 50 percent of Falcons Corporation. In year 1, Julio and Milania received distributions of $20,000 and $10,000, respectively, from Falcons Corporation Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 Sales revenue Cost of goods sold Salary to owners Jullo and Milanla Employee wages Depreciation expense Section 179 expense Interest Income Municipal bond Income Government fines Overall net income Distributions Show Transcribed Text Ordinary Income Section 179 expense Interest income Municipal bond income Nondeductible fines Distributions Year 1 $300,000 (40,000) (40,000) (25,000) (20,000) (30,000) 12,000 1,500 0 Show Transcribed Text $ 158,500 $ 30,000 Year 2 $430,000 (60,000) (80,000) (50,000) (40,000) (50,000) 22,500 4,000 (2,000) $ 174,500 What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above? $50,000
Transcribed Image Text:Julio and Milania are owners of Falcons Corporation, an S corporation. They each own 50 percent of Falcons Corporation. In year 1, Julio and Milania received distributions of $20,000 and $10,000, respectively, from Falcons Corporation Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 Sales revenue Cost of goods sold Salary to owners Jullo and Milanla Employee wages Depreciation expense Section 179 expense Interest Income Municipal bond Income Government fines Overall net income Distributions Show Transcribed Text Ordinary Income Section 179 expense Interest income Municipal bond income Nondeductible fines Distributions Year 1 $300,000 (40,000) (40,000) (25,000) (20,000) (30,000) 12,000 1,500 0 Show Transcribed Text $ 158,500 $ 30,000 Year 2 $430,000 (60,000) (80,000) (50,000) (40,000) (50,000) 22,500 4,000 (2,000) $ 174,500 What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above? $50,000
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