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Julio and Milania are owners of Falcons Corporation, an S corporation. They each own 50 percent of Falcons Corporation. In year 2, Julio and Milania each received distributions of $25,000 from Falcons Corporation. Falcons Corporation (an 3 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) Municipal bond income Government fines Overall net income Distributions Year 1 $300,000 (40,000) (40,000) (80,000) (25,000) (50,000) (20,000) (40,000) (30,000) (50,000) 12,000 1,500 0 Year 2 $430,000 (60,000) $158,500 $30,000 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 2 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. They each own 50 percent of Falcons Corporation. In year 2, Julio and Milania each received distributions of $25,000 from Falcons Corporation. Falcons Corporation (an 3 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) Municipal bond income Government fines Overall net income Distributions Year 1 $300,000 (40,000) (40,000) (80,000) (25,000) (50,000) (20,000) (40,000) (30,000) (50,000) 12,000 1,500 0 Year 2 $430,000 (60,000) $158,500 $30,000 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 2 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
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Julio and Milania are owners of Falcons Corporation, an S corporation. They each own 50 percent of Falcons Corporation. In year 2, Julio and Milania each received distributions of $25,000 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) Municipal bond income Government fines Overall net income Distributions Ordinary Income Section 179 expense Qualified business income Municipal bond income Distributions Nondeductible fines Year 1 $300,000 (40,000) (60,000) (40,000) (80,000) (25,000) (50,000) (20,000) Amount Year 2 $430,000 (40,000) (30,000) (50,000) 12,000 1,500 0 $158,500 $ 30,000 a. What amount of ordinary income and separately stated items are allocated to them for year 2 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis). Julio 22,500 4,000 (2,000) $174,500 $50,000 Milania
Transcribed Image Text:Julio and Milania are owners of Falcons Corporation, an S corporation. They each own 50 percent of Falcons Corporation. In year 2, Julio and Milania each received distributions of $25,000 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) Municipal bond income Government fines Overall net income Distributions Ordinary Income Section 179 expense Qualified business income Municipal bond income Distributions Nondeductible fines Year 1 $300,000 (40,000) (60,000) (40,000) (80,000) (25,000) (50,000) (20,000) Amount Year 2 $430,000 (40,000) (30,000) (50,000) 12,000 1,500 0 $158,500 $ 30,000 a. What amount of ordinary income and separately stated items are allocated to them for year 2 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis). Julio 22,500 4,000 (2,000) $174,500 $50,000 Milania
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