Cash receipts journal: A cash receipts journal is a special journal which records all the cash receipts in the business. The cash sales, cash purchases, and the cash collections are recorded in the cash receipts journal. Cash payments journal: A cash payments journal is the special journal that records all the cash payments and the cash disbursements in the business. Sales journal: A sales journal is a type of special journal which records the transactions of credit sales and the sales of the merchandise on account. As sales transactions are very frequent in the business, this special journal called as sales journal is prepared. Purchases journal: A purchases journal is a special journal which records the transactions of goods purchased on account. As purchases transactions are very frequent in the business, this special journal called as purchases journal is prepared. General journal: A general journal records those entries which are not recorded in the special journal. The entries which are frequent in the business are recorded in the special journal. The entries except those are recorded in the general journal like the closing entries, adjustment entries and the correction entries. To indicate: The journal in which the transaction is recorded.

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Chapter 7, Problem 7.10E

To determine

Cash receipts journal: A cash receipts journal is a special journal which records all the cash receipts in the business. The cash sales, cash purchases, and the cash collections are recorded in the cash receipts journal.

Cash payments journal: A cash payments journal is the special journal that records all the cash payments and the cash disbursements in the business.

Sales journal: A sales journal is a type of special journal which records the transactions of credit sales and the sales of the merchandise on account. As sales transactions are very frequent in the business, this special journal called as sales journal is prepared.

Purchases journal: A purchases journal is a special journal which records the transactions of goods purchased on account. As purchases transactions are very frequent in the business, this special journal called as purchases journal is prepared.

General journal: A general journal records those entries which are not recorded in the special journal. The entries which are frequent in the business are recorded in the special journal. The entries except those are recorded in the general journal like the closing entries, adjustment entries and the correction entries.

To indicate: The journal in which the transaction is recorded.

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JH, Inc., is a calendar year, accrual basis corporation with Joe as its sole shareholder (basis in his stock is $90,000). On January 1 of the current year, JH Corporation has accumulated E & P of $200,000. Before considering the effect of the distribution described below, the corporation’s current E & P is $50,000. On November 1, JH distributes an office building to Joe. The office building has an adjusted basis of $80,000 (fair market value of $100,000) and is subject to a mortgage of $110,000. Assume that the building has been depreciated using the ADS method for both income tax and E & P purposes. What are the tax consequences of the distribution to JH and to Joe? (In your answer, be sure to describe the effects on taxable income for both JH and Joe, the impact of the distribution on JH’s E & P, and Joe’s basis in the building.)

Joe is the sole shareholder of JH Corporation. Joe sold his stock to Ethan on October 31 for $150,000. Joe’s basis in JH stock was $50,000 at the start of the year. JH distributed land to Joe immediately before the sale. JH’s basis in the land was $20,000 (fair market value of $25,000). On December 31, Ethan received a $75,000 cash distribution from JH. During the year, JH has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true? a. Joe recognizes a $110,000 gain on the sale of his stock. b. Joe recognizes a $100,000 gain on the sale of his stock. c. Ethan receives $5,000 of dividend income.d. Joe receives $20,000 of dividend income. e. None of the above.