We have the following facts: The three below meet on January 2, 2021 and decide the following will happen as one transaction (even though not all on the same day) Emily exchanges land for 100 shares of ABC Inc on January 7, 2021. She has a basis of $10,000 and FMV of $100,000 David transfers cash for 10 shares on January 13, 2021. His basis and FMV are both $10,000 On February 10, 2021, Ethan agrees to exchange services during the next year for 100 shares of stock. They all agree that the services will be worth $100,000 QUESTION: Does this qualify as a $351 transaction? O a. No, Ethan's services taint the whole thing O b. Yes at Emily but no to David (he was after Emily and so no control) and no to Ethan for services O c. Yes, the three met at one time and all agreed to create the entity. So part of a prearranged plan O d. Yes as to Emily as she had control immediately after her transaction e. Yes as to Emily and David as they transferred property

We have the following facts: The three below meet on January 2, 2021 and decide the following will happen as one transaction (even though not all on the same day) Emily exchanges land for 100 shares of ABC Inc on January 7, 2021. She has a basis of $10,000 and FMV of $100,000 David transfers cash for 10 shares on January 13, 2021. His basis and FMV are both $10,000 On February 10, 2021, Ethan agrees to exchange services during the next year for 100 shares of stock. They all agree that the services will be worth $100,000 QUESTION: Does this qualify as a $351 transaction? O a. No, Ethan's services taint the whole thing O b. Yes at Emily but no to David (he was after Emily and so no control) and no to Ethan for services O c. Yes, the three met at one time and all agreed to create the entity. So part of a prearranged plan O d. Yes as to Emily as she had control immediately after her transaction e. Yes as to Emily and David as they transferred property

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Scenario Henry, Hunter, and Harry formed a partnership (Widget Unlimited) on January 1, 2020. Henry and Hunter each contributed $200,000 and Harry transferred a building he had purchased two years earlier to the partnership. The building had a tax basis of $150,000 and was appraised at $300,000. The building was also encumbered with a $100,000 mortgage. The partners plan to use the building to manufacture, distribute, and sell green and purple widgets. Harry will work full time operating the business for which he will receive guaranteed payments (not included in expenses) of $5,000 per month. Henry and Hunter will devote less than twelve days a year to the business. At the end of 2020, Widgets Unlimited had made $6,000 in mortgage principal payments. The partnership agreement specifies that Henry, Hunter, and Harry will share in income/loss in the ratio of 3:3:4. For the first year of operation, the partnership records disclose the following information: Sales revenue $820,000 Cost of…
Abby and Bailey are partners who share income in the ratio of 2:1 and have capital balances of $67,800 and $30,100, respectively. With the consent of Bailey, Sandra buys one-half of Abby's interest for $44,000. For what amount will Abby's capital account be debited to record admission of Sandra to the partnership?
The capital accounts of Trent Henry and Tim Chou have balances of $136, 500 and $95, 500, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry's interest for $31, 100 and one - fourth of Chou's interest for $19, 200. Clarke contributes $71, 200 cash to the partnership, for which she is to receive an ownership equity of $71, 200. Required: a. On December 31, journalize the entries to record the admission of (1) Gilbert and (2) Clarke. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. b. What are the capital balances of each partner after the admission of the new partners?
The capital accounts of Trent Henry and Tim Chou have balances of $147,400 and $92,600, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $27,400 and one-fourth of Chou’s interest for $19,000. Clarke contributes $75,000 cash to the partnership, for which she is to receive an ownership equity of $75,000. a. On December 31, journalize the entries to record the admission of (1) Gilbert and (2) Clarke. Refer to the chart of accounts for the exact wording of the account titles
Can you help me solve these to arrive to the answer? Thanks in advance!
Marcee and Rebecca are partners. Marcee has a capital balance of $50,000 and Rebecca has a capital balance of $35,000. Rebecca sells $15,000 of her ownership to Jason. Which of the following is true of the journal entry to admit Jason? A Rebecca, Capital will be credited for $15,000 B Jason, Capital will be debited for $20,000 C Jason, Capital will be credited for $15,000 D Rebecca, Capital will be debited for $20,000
Nadia and Adam are sole traders who run their own separate businesses. On 31 December 2019, their individual balance sheets show the following accounts: Nadia Cash Accounts receivable Inventory Equipment Building Land Mortgage loan Capital 500 11500 14500 21500 79000 121500 67000 181500 Adam 3500 3000 14000 23000 77000 123000 63500 180000 Starting in 2020, Nadia and Adam have agreed to form a partnership. The partnership agreement stipulates that all assets and liabilities will be transferred to the partnership. In addition, Nadia and Adam will invest an additional $5000 and $2500 in cash, respectively. Required: Prepare a balance sheet for Nadia and Adam's partnership as at 1 January 2020. (List assets in order of liquidity, i.e. in order of them being able to be converted into cash. Enter amounts without $ sign or thousands separators, e.g. 45000, not $45,000)
Jack and Tony are partners in a software engineering company. Jack and Tony have capital balances of $75,000 and $62,000 respectively. In 2020, the two partners made a profit of $240,000. How much should each receive from the profit in the absence of a partnership agreement? Jack will get…$ Tony will get…$
Bobbi and Stuart are partners. The partnership capital of Bobbi is $50,000 and that of Stuart is $85,600. Bobbi sells his interest in the partnership to John for $57,200. The journal entry for the admission of John as a new partner would include a credit to
On May 1, 2022, Carlo has been in a trading business for five years as a sole proprietor. He needed additional capital to fund business expansion so he decided to invite Jamie by investing cash for a one-third interest in the new partnership, CABLES Trading. CABLES Trading would assume the liabilities of Carlo's business. Jamie accepted the invitation and both agreed to revalue assets of Carlo's business as itemized: Accounts Receivable $50,000; Merchandise Inventory $28,000; Office Equipment $22,000; and Land $279,000. Account balances in the books of Carlo were as follows: Account Titles Debit Credit Cash P135,000 Accounts Receivable 60,000 Allowance for Doubtful Accounts P 4,000 Merchandise Inventory 25,000 Office Equipment 33,000 Accumulated Depreciation 15,000 Land 260,000 Accounts Payable 194,000 Carlo, Capital 300,000 How much is the capital of CABLES Trading upon formation?
On January 1, 2020, Mary and Jack form a partnership. Mary contributes $50,000 cash in exchange for a 50% interest. Jack contributes property with a tax basis of $70,000 and a fair market value of $50,000 in exchange for a 50% interest. Jack purchased the property on July 1, 2010. Does Mary or Jack need to recognize any gain/loss on their contributions?
Laurel and Hardy form a 50/50 partnership (HaHa Partners) in 2018. Laurel contributes land with a fair market value of $700,000 and an adjusted basis of $500,000. The land is subject to a $250,000 mortgage which the partnership assumes. Hardy contributes $450,000 of cash. In 2020, the partnership sells the land (originally contributed by Laurel) for $900,000. How much gain will Laurel report on his 2020 1040 return?