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Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively. UpAHill Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Sales revenue Cost of goods sold Salary to owners Jack and Jill Employee wages Year 1 Year 2 $ 175,000 $310,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000)

Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively. UpAHill Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Sales revenue Cost of goods sold Salary to owners Jack and Jill Employee wages Year 1 Year 2 $ 175,000 $310,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000)

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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Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively. UpAHill Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Year 1 $ 175,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000) (10,000) (15,000) Miscellaneous expenses (7,500) (9,000) Interest income (unrelated to business) 2,000 2,500 Qualified dividend income 1,000 Overall net income $ 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. Sales revenue Cost of goods sold Salary to owners Jack and Jill Employee wages Depreciation expense Year 2 $ 310,000 500 Ordinary income Qualifed business income Interest income Dividend income Allocated wages Unadjusted basis of qualified property 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 Year 2 Year 1 31,875 S 96.250 33,375 $1.000,125 1,500 $ 1.875 375 $ 750 OXS Year 1 Year 2 $10.625 $ 32.750 $11.125s 33,375$ S 500 $ 025 $ $ 125 S 250 s Os 0$ S $ 25,000$ 25,000$ 75,000 $ 0x 75.000
Transcribed Image Text:Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively. UpAHill Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Year 1 $ 175,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000) (10,000) (15,000) Miscellaneous expenses (7,500) (9,000) Interest income (unrelated to business) 2,000 2,500 Qualified dividend income 1,000 Overall net income $ 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. Sales revenue Cost of goods sold Salary to owners Jack and Jill Employee wages Depreciation expense Year 2 $ 310,000 500 Ordinary income Qualifed business income Interest income Dividend income Allocated wages Unadjusted basis of qualified property 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 Year 2 Year 1 31,875 S 96.250 33,375 $1.000,125 1,500 $ 1.875 375 $ 750 OXS Year 1 Year 2 $10.625 $ 32.750 $11.125s 33,375$ S 500 $ 025 $ $ 125 S 250 s Os 0$ S $ 25,000$ 25,000$ 75,000 $ 0x 75.000
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