Required information [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 $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 Year 1 $ 300,000 (40,000) Year 2 $ 430,000 (60,000) (40,000) (80,000) (25,000) (50,000) Depreciation expense Section 179 expense Interest income (related to business income) Municipal bond income (20,000) (40,000) (30,000) (50,000) 12,000 Government fines Overall net income Distributions 1,500 0 $ 158,500 $ 30,000 22,500 4,000 (2,000) $ 174,500 $ 50,000
Required information [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 $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 Year 1 $ 300,000 (40,000) Year 2 $ 430,000 (60,000) (40,000) (80,000) (25,000) (50,000) Depreciation expense Section 179 expense Interest income (related to business income) Municipal bond income (20,000) (40,000) (30,000) (50,000) 12,000 Government fines Overall net income Distributions 1,500 0 $ 158,500 $ 30,000 22,500 4,000 (2,000) $ 174,500 $ 50,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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).
b. 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).
![Required information
[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 $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
Year 1
$ 300,000
(40,000)
Year 2
$ 430,000
(60,000)
(40,000)
(80,000)
(25,000)
(50,000)
Depreciation expense.
Section 179 expense
Interest income (related to business income)
Municipal bond income
(20,000)
(40,000)
(30,000)
(50,000)
Government fines
Overall net income
Distributions
12,000
1,500
0
$ 158,500
$ 30,000
22,500
4,000
(2,000)
$ 174,500
$ 50,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa92c0a37-0faa-4452-b9fc-5366f444d857%2F1005eac1-ac7a-433c-a5ba-fa9e04c029c3%2Fyqtg2x9_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[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 $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
Year 1
$ 300,000
(40,000)
Year 2
$ 430,000
(60,000)
(40,000)
(80,000)
(25,000)
(50,000)
Depreciation expense.
Section 179 expense
Interest income (related to business income)
Municipal bond income
(20,000)
(40,000)
(30,000)
(50,000)
Government fines
Overall net income
Distributions
12,000
1,500
0
$ 158,500
$ 30,000
22,500
4,000
(2,000)
$ 174,500
$ 50,000
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