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Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In year 1, Julio and Milania each received distributions of $15,000 from Falcons Corporation. Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Sales revenue Cost of goods sold Salary to owners Julio and Milania Employee wages Depreciation expense Section 179 expense Interest income (related to business income) Municipal bond income Government fines Overall net income Distributions Year 1 $ 300,000 (40,000) (40,000) (25,000) (20,000) (30,000) 12,000 1,500 0 $ 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 $ 50,000 a. What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis).

Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In year 1, Julio and Milania each received distributions of $15,000 from Falcons Corporation. Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Sales revenue Cost of goods sold Salary to owners Julio and Milania Employee wages Depreciation expense Section 179 expense Interest income (related to business income) Municipal bond income Government fines Overall net income Distributions Year 1 $ 300,000 (40,000) (40,000) (25,000) (20,000) (30,000) 12,000 1,500 0 $ 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 $ 50,000 a. What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis).

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. Each owns 50 percent of Falcons Corporation. In year 1, Julio and Milania each received distributions of $15,000 from Falcons Corporation. Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Sales revenue Cost of goods sold Salary to owners Julio and Milania Employee wages Depreciation expense Section 179 expense Interest income (related to business income) Municipal bond income Government fines Overall net income Distributions Ordinary Income Section 179 expense Interest income Municipal bond income Government fines Distributions > Answer is not complete. X Amount $ 175,000 30,000 12,000 X 1,500 2,000 30,000 a. What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis). X $ $ Allocated to Julio $ $ $ Year 1 $ 300,000 (40,000) (40,000) 87,500 15,000 $ 158,500 $ 30,000 (25,000) (20,000) (30,000) 12,000 1,500 0 Allocated to Milania $ 6,000 X 750 200 × $ 15,000 $ Year 2 $ 430,000 (60,000) (80,000) (50,000) 87,500 15,000 6,000 750 200 15,000 (40,000) (50,000) 22,500 4,000 (2,000) $ 174,500 $ 50,000
Transcribed Image Text:Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In year 1, Julio and Milania each received distributions of $15,000 from Falcons Corporation. Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Sales revenue Cost of goods sold Salary to owners Julio and Milania Employee wages Depreciation expense Section 179 expense Interest income (related to business income) Municipal bond income Government fines Overall net income Distributions Ordinary Income Section 179 expense Interest income Municipal bond income Government fines Distributions > Answer is not complete. X Amount $ 175,000 30,000 12,000 X 1,500 2,000 30,000 a. What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis). X $ $ Allocated to Julio $ $ $ Year 1 $ 300,000 (40,000) (40,000) 87,500 15,000 $ 158,500 $ 30,000 (25,000) (20,000) (30,000) 12,000 1,500 0 Allocated to Milania $ 6,000 X 750 200 × $ 15,000 $ Year 2 $ 430,000 (60,000) (80,000) (50,000) 87,500 15,000 6,000 750 200 15,000 (40,000) (50,000) 22,500 4,000 (2,000) $ 174,500 $ 50,000
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