Compute the annual after-tax cash flow that is available for reinvestment in the business venture.

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Answer 1

Question

Chapter 12, Problem 2TPC

a.

To determine

Compute the annual after-tax cash flow that is available for reinvestment in the business venture.

b.

To determine

Compute the annual after-tax cash flow available for reinvestment in the business, if Person A operates the business as regular (C) corporation and it makes no dividend distributions.

c.

To determine

Explain the tax consequences to Person A and the business of the withdrawal in case if the business is operated as a sole proprietorship. Identify the after-tax cash flow would remain for reinvestment in the business and determine the amount after-tax cash flow would Person A have from the withdrawal.

d.

To determine

Explain the tax consequences to Person A and the business of a $20,000 withdrawal in the form of a dividend in case it is operated as a C Corporation. Identify the amount of after-tax cash flow would remain for reinvestment in the business. Determine the amount of after-tax cash flow will be retained from the dividend by Person A.

e.

To determine

Comment on the given situation for getting the better result.

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During its first month of operation, Peter's Auto Supply Corporation, which specializes the sale of auto equipment and supplies, completed the following transactions. July Transactions July 1 Issued Common Stock in exchange for $100,000 cash. July 1 Paid $4,000 rent for the months of July and August July 2 Paid the insurance company $2,400 for a one year insurance policy, beginning July 1. July 5 Purchased inventory on account for $35,000 (Assume that the perpetual inventory system is used.) July 6 Borrowed $36,500 from a local bank and signed a note. The interest rate is 10%, and principal and interest is due to be repaid in six months. July 8 Sold inventory on account for $17,000. The cost of the inventory is $7,000. July 15 Paid employees $6,000 salaries for the first half of the month. July 18 Sold inventory for $15,000 cash. The cost of the inventory was $6,000. July 20 Paid $15,000 to suppliers for the inventory purchased on January 5. July 26…

General Accounting Question 2.1

General Accounting

Answer 2

Question

Chapter 12, Problem 2TPC

a.

To determine

Compute the annual after-tax cash flow that is available for reinvestment in the business venture.

b.

To determine

Compute the annual after-tax cash flow available for reinvestment in the business, if Person A operates the business as regular (C) corporation and it makes no dividend distributions.

c.

To determine

Explain the tax consequences to Person A and the business of the withdrawal in case if the business is operated as a sole proprietorship. Identify the after-tax cash flow would remain for reinvestment in the business and determine the amount after-tax cash flow would Person A have from the withdrawal.

d.

To determine

Explain the tax consequences to Person A and the business of a $20,000 withdrawal in the form of a dividend in case it is operated as a C Corporation. Identify the amount of after-tax cash flow would remain for reinvestment in the business. Determine the amount of after-tax cash flow will be retained from the dividend by Person A.

e.

To determine

Comment on the given situation for getting the better result.

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Answer 3

Question

Chapter 12, Problem 2TPC

a.

To determine

Compute the annual after-tax cash flow that is available for reinvestment in the business venture.

b.

To determine

Compute the annual after-tax cash flow available for reinvestment in the business, if Person A operates the business as regular (C) corporation and it makes no dividend distributions.

c.

To determine

Explain the tax consequences to Person A and the business of the withdrawal in case if the business is operated as a sole proprietorship. Identify the after-tax cash flow would remain for reinvestment in the business and determine the amount after-tax cash flow would Person A have from the withdrawal.

d.

To determine

Explain the tax consequences to Person A and the business of a $20,000 withdrawal in the form of a dividend in case it is operated as a C Corporation. Identify the amount of after-tax cash flow would remain for reinvestment in the business. Determine the amount of after-tax cash flow will be retained from the dividend by Person A.

e.

To determine

Comment on the given situation for getting the better result.

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Answer 4

Question

Chapter 12, Problem 2TPC

a.

To determine

Compute the annual after-tax cash flow that is available for reinvestment in the business venture.

b.

To determine

Compute the annual after-tax cash flow available for reinvestment in the business, if Person A operates the business as regular (C) corporation and it makes no dividend distributions.

c.

To determine

Explain the tax consequences to Person A and the business of the withdrawal in case if the business is operated as a sole proprietorship. Identify the after-tax cash flow would remain for reinvestment in the business and determine the amount after-tax cash flow would Person A have from the withdrawal.

d.

To determine

Explain the tax consequences to Person A and the business of a $20,000 withdrawal in the form of a dividend in case it is operated as a C Corporation. Identify the amount of after-tax cash flow would remain for reinvestment in the business. Determine the amount of after-tax cash flow will be retained from the dividend by Person A.

e.

To determine

Comment on the given situation for getting the better result.

Expert Solution & Answer

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Answer 5

Chapter 12, Problem 2TPC

a.

To determine

Compute the annual after-tax cash flow that is available for reinvestment in the business venture.

b.

To determine

Compute the annual after-tax cash flow available for reinvestment in the business, if Person A operates the business as regular (C) corporation and it makes no dividend distributions.

c.

To determine

Explain the tax consequences to Person A and the business of the withdrawal in case if the business is operated as a sole proprietorship. Identify the after-tax cash flow would remain for reinvestment in the business and determine the amount after-tax cash flow would Person A have from the withdrawal.

d.

To determine

Explain the tax consequences to Person A and the business of a $20,000 withdrawal in the form of a dividend in case it is operated as a C Corporation. Identify the amount of after-tax cash flow would remain for reinvestment in the business. Determine the amount of after-tax cash flow will be retained from the dividend by Person A.

e.

To determine

Comment on the given situation for getting the better result.

Answer 6

Chapter 12, Problem 2TPC

a.

To determine

Compute the annual after-tax cash flow that is available for reinvestment in the business venture.

Answer 7

Chapter 12, Problem 2TPC

a.

To determine

Compute the annual after-tax cash flow that is available for reinvestment in the business venture.

Answer 8

b.

To determine

Compute the annual after-tax cash flow available for reinvestment in the business, if Person A operates the business as regular (C) corporation and it makes no dividend distributions.

Answer 9

b.

To determine

Compute the annual after-tax cash flow available for reinvestment in the business, if Person A operates the business as regular (C) corporation and it makes no dividend distributions.

Answer 10

c.

To determine

Explain the tax consequences to Person A and the business of the withdrawal in case if the business is operated as a sole proprietorship. Identify the after-tax cash flow would remain for reinvestment in the business and determine the amount after-tax cash flow would Person A have from the withdrawal.

Answer 11

c.

To determine

Explain the tax consequences to Person A and the business of the withdrawal in case if the business is operated as a sole proprietorship. Identify the after-tax cash flow would remain for reinvestment in the business and determine the amount after-tax cash flow would Person A have from the withdrawal.

Answer 12

d.

To determine

Explain the tax consequences to Person A and the business of a $20,000 withdrawal in the form of a dividend in case it is operated as a C Corporation. Identify the amount of after-tax cash flow would remain for reinvestment in the business. Determine the amount of after-tax cash flow will be retained from the dividend by Person A.

Answer 13

d.

To determine

Explain the tax consequences to Person A and the business of a $20,000 withdrawal in the form of a dividend in case it is operated as a C Corporation. Identify the amount of after-tax cash flow would remain for reinvestment in the business. Determine the amount of after-tax cash flow will be retained from the dividend by Person A.

Answer 14

e.

To determine

Comment on the given situation for getting the better result.

Answer 15

e.

To determine

Comment on the given situation for getting the better result.

Answer 16

Expert Solution & Answer

Answer 17

Expert Solution & Answer

Answer 18

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Answer 19

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Compute the annual after-tax cash flow that is available for reinvestment in the business venture.

Solution Summary: The author explains how to calculate the annual after-tax cash flow available for reinvestment in the business venture.

Compute the annual after-tax cash flow that is available for reinvestment in the business venture.

Compute the annual after-tax cash flow available for reinvestment in the business, if Person A operates the business as regular (C) corporation and it makes no dividend distributions.

Comment on the given situation for getting the better result.

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Chapter 12 Solutions