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 $10,000 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 $ 305,000 (43,000) (40,000) (25,000) (15,000) (30,000) 10,000 1,700 0 $ 163,700 $ 20,000 Year 2 $ 435,000 (63,000) (80,000) (50,000) (30,000) (50,000) 18,500 4,400 (2,000) $ 182,900 $ 50,000

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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[The following information applies to the questions displayed below.]
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 $10,000 from Falcons Corporation.
Sales revenue
Cost of goods sold
Salary to owners Julio and Milania
Employee wages
Depreciation expense
Section 179 expense
Falcons Corporation (an S Corporation)
Income Statement
December 31, Year 1 and Year 2
Interest income (related to business income)
Municipal bond income.
Government fines
Overall net income.
Distributions
Show Transcribed Text
Ordinary Income
Section 179 expense
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).
Municipal bond income
Unadjusted basis of qualified property
Allocated wages
Distributions
Qualified business income
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).
Amount
Allocated to
Julio
30,000
1,700
200,000
$ 65,000 $
$
20,000 $
Year 1
$ 305,000
(43,000)
(40,000)
(25,000)
(15,000)
(30,000)
10,000
1,700
0
15,000
850
$ 163,700
$ 20,000
100.000
Allocated to
Milania
32,500 $
10,000 $
Year 2
$ 435,000
(63,000)
(80,000)
(50,000)
(30,000)
(50,000)
18,500
4,400
(2,000)
$ 182,900
$ 50,000
15,000
850
100,000
32,500
10,000
Transcribed Image Text:[The following information applies to the questions displayed below.] 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 $10,000 from Falcons Corporation. Sales revenue Cost of goods sold Salary to owners Julio and Milania Employee wages Depreciation expense Section 179 expense Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Interest income (related to business income) Municipal bond income. Government fines Overall net income. Distributions Show Transcribed Text Ordinary Income Section 179 expense 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). Municipal bond income Unadjusted basis of qualified property Allocated wages Distributions Qualified business income 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). Amount Allocated to Julio 30,000 1,700 200,000 $ 65,000 $ $ 20,000 $ Year 1 $ 305,000 (43,000) (40,000) (25,000) (15,000) (30,000) 10,000 1,700 0 15,000 850 $ 163,700 $ 20,000 100.000 Allocated to Milania 32,500 $ 10,000 $ Year 2 $ 435,000 (63,000) (80,000) (50,000) (30,000) (50,000) 18,500 4,400 (2,000) $ 182,900 $ 50,000 15,000 850 100,000 32,500 10,000
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