Prepare the bank reconciliation of Company J, as at April 30

Question

Amy is evaluating the cash flow consequences of organizing her business entity SHO as an LLC (taxed as a sole proprietorship), an S corporation, or a C corporation. She used the following assumptions to make her calculations: a) For all entity types, the business reports $22,000 of business income before deducting compensation paid to Amy and payroll taxes SHO pays on Amy's behalf. b) All entities use the cash method of accounting. c) If Amy organizes SHO as an S corporation or a C corporation, SHO will pay Amy a $5,000 annual salary (assume the salary is reasonable for purposes of this problem). For both the S and C corporations, Amy will pay 7.65 percent FICA tax on her salary and SHO will also pay 7.65 percent FICA tax on Amy's salary (the FICA tax paid by the entity is deductible by the entity). d) Amy's marginal ordinary income tax rate is 35 percent, and her income tax rate on qualified dividends and net capital gains is 15 percent. e) Amy's marginal self-employment tax rate is…

Answer 1

Question

Chapter 6, Problem 5P

1.

To determine

Prepare the bank reconciliation of Company J, as at April 30

2.

To determine

Prepare the adjusting journal entries that arise due to bank reconciliation

3.

To determine

Indicate the balance in cash account, after posting the reconciliation entries

4.

To determine

Indicate the cash balance to be reported in the balance sheet as at April 30.

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