Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively. Sales revenue UpAHill Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Cost of goods sold Salary to owners Jack and Jill Employee wages Depreciation expense Miscellaneous expenses Interest income (unrelated to business) Qualified dividend income Overall net income Year 1 $ 175,000 Year 2 $ 310,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000) (10,000) (15,000) (7,500) (9,000) 2,000 2,500 500 1,000 $ 45,000 $ 134,500 a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years. Answer is complete but not entirely correct. Jack Jill Ordinary income Year 1 $ 11,125 Year 2 $ 33,375 Year 1 Year 2 $ 33,375 $ 100,125 Qualified business income $ 10,625 $ Interest income $ 500 32,750 S 625 $ 31,875 $ 98,250 $ 1,500 S 1,875 Dividend income S 125 S 250 S 375 S 750 Allocated wages S 3,750 $ 5,000 $ 11,250 $ 15,000 × Unadjusted basis of qualified property $ 25,000 $ 25,000 $ 75,000 $ 75,000
Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively. Sales revenue UpAHill Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Cost of goods sold Salary to owners Jack and Jill Employee wages Depreciation expense Miscellaneous expenses Interest income (unrelated to business) Qualified dividend income Overall net income Year 1 $ 175,000 Year 2 $ 310,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000) (10,000) (15,000) (7,500) (9,000) 2,000 2,500 500 1,000 $ 45,000 $ 134,500 a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years. Answer is complete but not entirely correct. Jack Jill Ordinary income Year 1 $ 11,125 Year 2 $ 33,375 Year 1 Year 2 $ 33,375 $ 100,125 Qualified business income $ 10,625 $ Interest income $ 500 32,750 S 625 $ 31,875 $ 98,250 $ 1,500 S 1,875 Dividend income S 125 S 250 S 375 S 750 Allocated wages S 3,750 $ 5,000 $ 11,250 $ 15,000 × Unadjusted basis of qualified property $ 25,000 $ 25,000 $ 75,000 $ 75,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
12
Transcribed Image Text:Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent,
respectively.
Sales revenue
UpAHill Corporation (an S Corporation)
Income Statement
December 31, Year 1 and Year 2
Cost of goods sold
Salary to owners Jack and Jill
Employee wages
Depreciation expense
Miscellaneous expenses
Interest income (unrelated to business)
Qualified dividend income
Overall net income
Year 1
$ 175,000
Year 2
$ 310,000
(60,000)
(85,000)
(40,000)
(50,000)
(15,000)
(20,000)
(10,000)
(15,000)
(7,500)
(9,000)
2,000
2,500
500
1,000
$ 45,000
$ 134,500
a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on
the information above? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in
both years.
Answer is complete but not entirely correct.
Jack
Jill
Ordinary income
Year 1
$ 11,125
Year 2
$ 33,375
Year 1
Year 2
$ 33,375
$ 100,125
Qualified business income
$ 10,625 $
Interest income
$
500
32,750
S 625
$ 31,875
$ 98,250
$
1,500 S
1,875
Dividend income
S
125
S
250
S
375
S
750
Allocated wages
S 3,750 $ 5,000
$ 11,250
$
15,000 ×
Unadjusted basis of qualified property
$ 25,000 $ 25,000
$ 75,000
$
75,000
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