[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. Inyear 1, Julio and Milania each received distributions of $10,000 from Falcons Corporation.Sales revenueCost of goods soldSalary to owners Julio and MilaniaEmployee wagesDepreciation expenseSection 179 expenseFalcons Corporation (an S Corporation)Income StatementDecember 31, Year 1 and Year 2Interest income (related to business income)Municipal bond income.Government finesOverall net income.DistributionsShow Transcribed TextOrdinary IncomeSection 179 expensea. 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 incomeUnadjusted basis of qualified propertyAllocated wagesDistributionsQualified business incomea. 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 $200,000 of qualified property (unadjusted basis).AmountAllocated toJulio30,0001,700200,000$ 65,000 $$20,000 $Year 1$ 305,000(43,000)(40,000)(25,000)(15,000)(30,000)10,0001,700015,000850$ 163,700$ 20,000100.000Allocated toMilania32,500 $10,000 $Year 2$ 435,000(63,000)(80,000)(50,000)(30,000)(50,000)18,5004,400(2,000)$ 182,900$ 50,00015,000850100,00032,50010,000

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

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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