All Related Questions of Sole Proprietorship

Q: Astro Languet established Languet Products Co. as a sole proprietorship on

Astro Languet established Languet Products Co. as a sole proprietorship on January 5, 2014. At the company's year end of December 31, 2014, the accounts had the following balances (in thousands): A c...

Q: Tawana owns and operates a sole proprietorship and has a 40 percent

Tawana owns and operates a sole proprietorship and has a 40 percent marginal tax rate. She provides her son, Jonathon, $8,000 a year for college expenses. Jonathon works as a pizza delivery person eve...

Q: Hank started a new business in June of last year, Hank’s

Hank started a new business in June of last year, Hank’s Donut World (HW for short). He has requested your advice on the following specific tax matters associated with HWâ€...

Q: Jack operates a plumbing business as a sole proprietorship on the cash

Jack operates a plumbing business as a sole proprietorship on the cash method. Besides providing plumbing services, Jack also sells plumbing supplies to homeowners and other plumbers. The sales of plu...

Q: Clyde lives and operates a sole proprietorship in Dallas, Texas.

Clyde lives and operates a sole proprietorship in Dallas, Texas. This year Clyde found it necessary to travel to Fort Worth (about 25 miles away) for legitimate business reasons. Is Clyde’s trip likel...

Q: Nicole organized a new corporation. The corporation began business on April

Nicole organized a new corporation. The corporation began business on April 1 of year 1. She made the following expenditures associated with getting the corporation started: a. What is the total amoun...

Q: Ben teaches golf lessons at a country club under a business called

Ben teaches golf lessons at a country club under a business called Ben’s Pure Swings (BPS). He operates this business as a sole proprietorship on the accrual basis of accounting. Ben’s trusty accounta...

Q: WAR (We Are Rich) has been in business since 1983

WAR (We Are Rich) has been in business since 1983. WAR is an accrual method sole proprietorship that deals in the manufacturing and wholesaling of various types of golf equipment. Hack & Hack CPAs...

Q: Brooke owns a sole proprietorship in which she works as a management

Brooke owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home where she meets with clients, prepares bills, and performs other work-related tasks...

Q: Alisha, who is single, owns a sole proprietorship in which

Alisha, who is single, owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home where she meets with clients, prepares bills, and performs other wo...

Q: Jim has decided to contribute some equipment he previously used in his

Jim has decided to contribute some equipment he previously used in his sole proprietorship in exchange for a 10 percent profits and capital interest in Fast Choppers LLC. Jim originally paid $200,000...

Q: Several years ago, your client, Brooks Robinson, started an

Several years ago, your client, Brooks Robinson, started an office cleaning service. His business was very successful, owing much to his legacy as the greatest defensive third baseman in major league...

Q: Ramon incorporated his sole proprietorship by transferring inventory, a building,

Ramon incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property trans...

Q: Carla incorporated her sole proprietorship by transferring inventory, a building,

Carla incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property trans...

Q: Ivan incorporated his sole proprietorship by transferring inventory, a building,

Ivan incorporated his sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property transf...

Q: Zhang incorporated her sole proprietorship by transferring inventory, a building,

Zhang incorporated her sole proprietorship by transferring inventory, a building, and land to the corporation in return for 100 percent of the corporation’s stock. The property trans...

Q: Lonnie Davis has been a general partner in the Highland Partnership for

Lonnie Davis has been a general partner in the Highland Partnership for many years and is also a sole proprietor in a separate business. To spend more time focusing on his sole proprietorship, he plan...

Q: Maud, a calendar year taxpayer, is the owner of a

Maud, a calendar year taxpayer, is the owner of a sole proprietorship that uses the cash method. On February 1, 2017, she leases an office building to use in her business for $120,000 for an 18-month...

Q: For each of the following independent transactions, calculate the recognized gain

For each of the following independent transactions, calculate the recognized gain or loss to the seller and the adjusted basis to the buyer. a. Bonnie sells Parchment, Inc. stock (adjusted basis $17,0...

Q: The following are independent situations. a. A new

The following are independent situations. a. A new company is formed and sells 100 shares of stock for $12 per share to investors. b. A company purchases for $18,000 cash a new delivery truck that h...

Q: Place the corresponding letter of the definition next to the term.

Place the corresponding letter of the definition next to the term. ______ 1. Liabilities ______ 2. Assets ______ 3. Corporation ______ 4. Dividends ______ 5. Sole proprietorship ______ 6. Partner...

Q: Assume for each of the following independent cases that the annual accounting

Assume for each of the following independent cases that the annual accounting period ends on December 31, 2011, and that the revenue and expense accounts at that date reflect a loss of $20,000. Case A...

Q: Which of the following statements is false concerning forms of business organization

Which of the following statements is false concerning forms of business organization? a. A corporation has tax advantages over the other forms of business organization. b. It is easier for a corporati...

Q: Lynn, age 45, is single and has no dependents.

Lynn, age 45, is single and has no dependents. Her income and expenses for the current year are reported as follows. Income Salary…………………………………………………………………$33,000 Taxable interest on corporate bonds…...

Q: Rod Clooney purchases Agnes Mitchell’s sole proprietorship for $990,000

Rod Clooney purchases Agnes Mitchell’s sole proprietorship for $990,000 on August 15, 2017. The assets of the business are as follows: a. Calculate Agnes’s realiz...

Q: Keith’s sole proprietorship holds assets that, if sold, would yield

Keith’s sole proprietorship holds assets that, if sold, would yield a gain of $100,000. It also owns assets that would yield a loss of $30,000. Keith incorporates his business using only the gain asse...

Q: Ahmed Zinna (16 Southside Drive, Charlotte, NC 28204),

Ahmed Zinna (16 Southside Drive, Charlotte, NC 28204), one of your clients, owns two retail establishments in downtown Charlotte and has come to you seeking advice concerning the tax consequences of c...

Q: Dedriea contributes to her wholly owned corporation some tangible personal property she

Dedriea contributes to her wholly owned corporation some tangible personal property she had used in her sole proprietorship business and depreciated. She had acquired the property for $566,000 and had...

Q: Devon Bishop, age 45, is single. He lives at

Devon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1112. Devon does not want $3 to go to the Presidential Election Campaign Fund....

Q: Steven established a sole proprietorship in 2012. He sold § 1231

Steven established a sole proprietorship in 2012. He sold § 1231 assets at a loss in 2015 and 2016. He had only sold § 1231 assets at a gain before 2015. In 2017, he could sell a § 1231 asset at a gai...

Q: Andy has operated his moving company, MoveOn, as a sole

Andy has operated his moving company, MoveOn, as a sole proprietorship for several years. In the current tax year, MoveOn placed into service $480,000 of property qualifying for immediate expensing un...

Q: Mike and Melissa form the equal MM Partnership. Mike contributes cash

Mike and Melissa form the equal MM Partnership. Mike contributes cash of $40,000 and land (fair market value of $100,000, adjusted basis of $120,000), and Melissa contributes the assets of her sole pr...

Q: Discuss whether any of the following individuals are entitled to an office

Discuss whether any of the following individuals are entitled to an office-in-home deduction: a. Maggie is a self-employed management consultant who maintains an office in her home exclusively used f...

Q: Ed operates a storage business as a sole proprietorship and owns the

Ed operates a storage business as a sole proprietorship and owns the following assets acquired in 1998: Warehouse…………………………………..$400,000 Minus: Accumulated depreciation…..(230,000) Adjusted basis…………...

Q: Rod Clooney purchases Agnes Mitchell’s sole proprietorship for $990,000

Rod Clooney purchases Agnes Mitchell’s sole proprietorship for $990,000 on August 15, 2015. The assets of the business are as follows: Rod and Agnes agree that $50,000 of the purcha...

Q: For each of the following independent transactions, calculate the recognized gain

For each of the following independent transactions, calculate the recognized gain or loss to the seller and the adjusted basis to the buyer. a. Bonnie sells Parchment, Inc. stock (adjusted basis $17...

Q: Match each of the following forms of business organization with a set

Match each of the following forms of business organization with a set of characteristics: sole proprietorship (SP), partnership (P), corporation (C). (a) _____ Shared control, tax advantages, increase...

Q: Abel, the sole shareholder of Ace Corporation, has an opportunity

Abel, the sole shareholder of Ace Corporation, has an opportunity to purchase the assets of a sole proprietorship for $50,000 in cash. Ace has a substantial E&P balance. Abel does not have sufficient...

Q: Mark transfers all the property of his sole proprietorship to newly formed

Mark transfers all the property of his sole proprietorship to newly formed Utah Corporation in exchange for all the Utah stock. Mark has claimed depreciation on some of the property. Under what circum...

Q: Lucia, a single taxpayer, operates a florist business. She

Lucia, a single taxpayer, operates a florist business. She is considering either continuing the business as a sole proprietorship or reorganizing it as either a C corporation or an S corporation. Her...

Q: One way to compare the accumulation of income by alternative business entity

One way to compare the accumulation of income by alternative business entity forms is to use mathematical models. The following models express the investment after-tax accumulation calculation for a p...

Q: Tom incorporates his sole proprietorship as Total Corporation and transfers its assets

Tom incorporates his sole proprietorship as Total Corporation and transfers its assets to Total in exchange for all 100 shares of Total stock and four $10,000 interest-bearing notes. The stock has a $...

Q: What are the advantages of the corporate for mover a sole proprietorship

What are the advantages of the corporate for mover a sole proprietorship or a partnership? What are the disadvantages of this form?

Q: The following are independent situations. a. A new company

The following are independent situations. a. A new company is formed and sells 100 shares of $1 par value stock for $12 per share to investors. b. A company purchases for $18,000 cash a new delivery t...

Q: (Supplement A) Briefly differentiate between a sole proprietorship, a

(Supplement A) Briefly differentiate between a sole proprietorship, a partnership, and a corporation. Supplement A: Types of Business Entities: This textbook emphasizes accounting for profit-making b...

Q: Match each definition with its related term or abbreviation by entering the

Match each definition with its related term or abbreviation by entering the appropriate letter in the space provided.

Q: For the first five months of its existence (August through December

For the first five months of its existence (August through December 2017), the Estate of Amy Ennis had gross income (net of expenses) of $7,000 per month. For January through July 2018, the executor e...

Q: What are the four primary disadvantages of the sole proprietorship and partnership

What are the four primary disadvantages of the sole proprietorship and partnership forms of business organization? What benefits are there to these types of business organization as opposed to the cor...

Q: In early 2003, Doc and Lyn McGee formed the McGee Cake

In early 2003, Doc and Lyn McGee formed the McGee Cake Company. The company produced a full line of cakes, and its specialties included chess cake, lemon pound cake, and doubleiced, double-chocolate c...

Q: Ahmed Zinna (16 Southside Drive, Charlotte, NC 28204),

Ahmed Zinna (16 Southside Drive, Charlotte, NC 28204), one of your clients, owns two retail establishments in downtown Charlotte and has come to you seeking advice concerning the tax consequences of c...

Q: Laurie Gladin owns land and a building that she has been using

Laurie Gladin owns land and a building that she has been using in her sole proprietorship. She is going to incorporate her sole proprietorship as a C corporation. Laurie must decide whether to contrib...

Q: Using the legend provided, indicate which form of business entity each

Using the legend provided, indicate which form of business entity each of the following characteristics describes. Some of the characteristics may apply to more than one form of business entity. a. Ha...

Q: In 2015, Susan’s sole proprietorship earns $300,000 of

In 2015, Susan’s sole proprietorship earns $300,000 of self-employment net income (after the deduction for one-half of self-employment tax). a. Calculate the maximum amount Susan can deduct for contr...

Q: George and Aimee are married. George has wage income of $

George and Aimee are married. George has wage income of $190,000 and Aimee has a sole proprietorship that generated net income of $85,000. They also have interest and dividend income of $21,000. Compu...

Q: Rod Clooney purchases Agnes Mitchell’s sole proprietorship for $990,000

Rod Clooney purchases Agnes Mitchell’s sole proprietorship for $990,000 on August 15, 2015. The assets of the business are as follows: Rod and Agnes agree that $50,000 of the purcha...

Q: For each of the following independent transactions, calculate the recognized gain

For each of the following independent transactions, calculate the recognized gain or loss to the seller and the adjusted basis to the buyer. a. Bonnie sells Parchment, Inc. stock (adjusted basis $17...

Q: Joey and Camilla are married and have three children, ages 8

Joey and Camilla are married and have three children, ages 8, 16, and 18. They own a commercial cleaning business that is organized as a sole proprietorship and makes $170,000 annually. They have $3...

Q: The Rollins Group produces training corporate training videos. It operates as

The Rollins Group produces training corporate training videos. It operates as a sole proprietorship and is 100% owned by Scott Rollins. For 2017, Rollins has gross receipts from qualified production...

Q: Nan wants to incorporate her sole proprietorship and will transfer cash of

Nan wants to incorporate her sole proprietorship and will transfer cash of $5,000 and property with a fair market value of $60,000 and a basis of $20,000. The corporation will assume the $55,000 mort...

Q: Shree is considering opening a travel agency. She spends $47

Shree is considering opening a travel agency. She spends $47,000 investigating the profitability of the business and potential locations and $5,000 for legal and other fees incident to the organizati...

Q: Lulu Enterprises sells a building with an adjusted basis of $40

Lulu Enterprises sells a building with an adjusted basis of $40,000 for $85,000. Lulu paid $60,000 for the building five years ago. What is the treatment of the gain on the sale of the building if a...

Q: Fred's Foam Foundations (FFF) is a sole proprietorship that Fred

Fred's Foam Foundations (FFF) is a sole proprietorship that Fred started in 2012. Before the current year, FFF had not disposed of any property it owned. During the current year, FFF has the followi...

Q: Refer to the facts in problem 58. In the following year

Refer to the facts in problem 58. In the following year, FFF has these gains and losses: Casualty gain on building………………$ 5,000 Section 1231 gains…………………………$ 3,000 Section 1231 losses……………………….....

Q: Assume for each of the following independent cases that the annual accounting

Assume for each of the following independent cases that the annual accounting period ends on December 31. Revenues for the year were $144,000. Expenses for the year were $164,000. Case A: Assume that...

Q: A sole proprietorship was started on January 1, 2018, when

A sole proprietorship was started on January 1, 2018, when it received $60,000 cash from Marlin Jones, the owner. During 2018, the company earned $35,300 in cash revenues and paid $16,200 in cash expe...

Q: Cascade Company was started on January 1, 2018, when it

Cascade Company was started on January 1, 2018, when it acquired $60,000 cash from the owners. During 2018, the company earned cash revenues of $35,000 and incurred cash expenses of $18,100. The compa...

Q: Frank plans to open a sporting goods store and to hire Gogi

Frank plans to open a sporting goods store and to hire Gogi and Hap. Frank will invest only his own funds. He expects that he will not make a profit for at least eighteen months and will make only a s...

Q: Why is the partnership form of business organization sometimes preferred over the

Why is the partnership form of business organization sometimes preferred over the corporate or sole proprietorship forms?

Q: Haskins and Sells formed a partnership on January 2, 20X3.

Haskins and Sells formed a partnership on January 2, 20X3. Each had been a sole proprietor before forming their partnership. Part I: Each partner’s contributions follow. The amou...

Q: The following is the monthly payroll for the last three months of

The following is the monthly payroll for the last three months of the year for Allen’s Sporting Goods Shop, 2 Boat Road, Lynn, Massachusetts 01945. The shop is a sole proprietorship...

Q: The following is the monthly payroll for the last three months of

The following is the monthly payroll for the last three months of the year for Turner’s Sporting Goods Shop, 2 Boat Road, Lynn, Massachusetts 01945. The shop is a sole proprietorship...

Q: Using the information from Problem 8A-3, please complete Form

Using the information from Problem 8A-3, please complete Form 940 for Allen’s Sporting Goods for the current year. Additional information needed to complete the form is as follows:...

Q: Using the information from Problem 8B-3, please complete Form

Using the information from Problem 8B-3, please complete Form 940 for Turner’s Sporting Goods for the current year. Additional information needed to complete the form is as follows:...

Q: Kimberly Smith, a friend of yours, is a freelance journalist

Kimberly Smith, a friend of yours, is a freelance journalist. She writes articles on business topics and sells them to business periodicals, newspapers, and online sites. She just read an article abou...

Q: Is a sole proprietorship an appropriate form of ownership for an aggressive

Is a sole proprietorship an appropriate form of ownership for an aggressive entrepreneurial firm? Why or why not?

Q: Margaret Miller operated an H&R Block tax- preparation franchise

Margaret Miller operated an H&R Block tax- preparation franchise for 15 years. She hired William Hehlen as an income tax return preparer for five years, from 1997 to 2001. Each year, Miller and Hehlen...

Q: Milburn Pierce was the sole proprietor of the Pierce Painting Company,

Milburn Pierce was the sole proprietor of the Pierce Painting Company, a painting contracting company with two employees in addition to Pierce. Pierce bought workers’ compensation insurance for his bu...

Q: A corporation, Platforms, held stock that was not registered with

A corporation, Platforms, held stock that was not registered with the SEC under the Securities Act of 1933. William Martin provided consulting to Platforms as an employee of a sole proprietorship call...

Q: Davis and Shipman founded a partnership under the name of Shipman &

Davis and Shipman founded a partnership under the name of Shipman & Davis Lumber Company. Seven years later, the partnership was dissolved by written agreement. Notice of the dissolution was published...

Q: The following describe several different business organizations. Determine whether the description

The following describe several different business organizations. Determine whether the description refers to a sole proprietorship (SP), partnership (P), or corporation (C). a. Micah Douglas and Natha...

Q: Business transactions completed by Hannah Venedict during the month of September are

Business transactions completed by Hannah Venedict during the month of September are as follows. a. Venedict invested $60,000 cash along with office equipment valued at $25,000 in a new sole proprieto...

Q: A sole proprietorship had the following assets and liabilities at the beginning

A sole proprietorship had the following assets and liabilities at the beginning and end of this year. Determine the net income earned or net loss incurred by the business during the year for each of...

Q: Match each of the following forms of business organization with a set

Match each of the following forms of business organization with a set of characteristics: sole proprietorship (SP), partnership (P), corporation (C). (a) _____ Shared control, tax advantages, increase...

Q: Jennifer and Jason Greco are married and file a joint tax return

Jennifer and Jason Greco are married and file a joint tax return. Their two dependent children (Jim, age 14 and Jessica, age 16); both live at home. The Grecos have the following income and expenses:...

Q: Jessica plans to invest $150,000 in a second business

Jessica plans to invest $150,000 in a second business. She expects to generate a 12 percent before-tax return on her investment the first year. Her marginal tax rate is 25 percent due to the income fr...

Q: Jeremy is setting up a service business. He can either operate

Jeremy is setting up a service business. He can either operate the business as a sole proprietorship or he can incorporate as a regular C corporation. He expects that the business will have gross inco...

Q: Carol has recently incorporated her sole proprietorship and is considering making an

Carol has recently incorporated her sole proprietorship and is considering making an S election. The corporation has $200,000 of gross revenue and expenses of $75,000 before Carol’s salary. She plans...

Q: Evan is setting up a new business. He can operate the

Evan is setting up a new business. He can operate the business as a sole proprietorship or he can incorporate as a regular C corporation or as an S corporation. He expects that the business will have...

Q: Luis operates a bakery as a sole proprietorship which generated $280

Luis operates a bakery as a sole proprietorship which generated $280,000 in net income. He has four bakers whom he employs on a full-time basis and who participate in a company-paid health insurance p...

Q: Go to www.irs.gov and print Form 1040 and

Go to www.irs.gov and print Form 1040 and Schedule SE. Complete the first page of Form 1040 and Schedule SE for Angelina Carlyle who is single. She reports $195,000 of net profit on her Schedule C fro...

Q: On March 15, 2015, James Smith formed a business to

On March 15, 2015, James Smith formed a business to rent and service vending machines providing healthy snack alternatives and juices to the local middle and high schools. He operates the business as...

Q: Bernadette sold her home. She received cash of $40,

Bernadette sold her home. She received cash of $40,000, the buyer assumed her mortgage of $180,000, and she paid closing costs of $2,300 and a broker’s commission of $7,000. a. What is the amount rea...

Q: Clarice became very ill in February of 2017 and was unable to

Clarice became very ill in February of 2017 and was unable to work the rest of the year. She had only $12,000 of income from her sole proprietorship for the time she worked and was forced to sell the...

Q: Late in the current year, Bradley Corporation’s factory was destroyed by

Late in the current year, Bradley Corporation’s factory was destroyed by a tornado. Bradley determined that its unreimbursed loss on their building built ten years ago was $200,000. They also had a $7...

Q: What do you believe led to the conclusion that a sole proprietorship

What do you believe led to the conclusion that a sole proprietorship should report its results on the owner’s tax return?

Q: Tinker incorporates his sole proprietorship by transferring a building, equipment,

Tinker incorporates his sole proprietorship by transferring a building, equipment, and inventory to the Tinker Corporation in exchange for all its stock. The building has a value of $750,000 and a bas...

Q: Two years ago, Warren purchased a computer for $4,

Two years ago, Warren purchased a computer for $4,000 that was used exclusively for personal purposes until this year. At the beginning of the current year, Warren opened a consulting business as a...

Q: a. How does a sole proprietorship differ from a partnership?

a. How does a sole proprietorship differ from a partnership? b. Explain the difference between a general partner and a limited partner. c. Describe the issues that should be included in a partnership...

Q: Select the correct answer. /

Select the correct answer.

Q: A sole proprietorship was started on January 1, Year 1,

A sole proprietorship was started on January 1, Year 1, when it received $30,000 cash from Maria Lopez, the owner. During Year 1, the company earned $50,000 in cash revenues and paid $22,300 in cash e...

Q: Cascade Company was started on January 1, Year 1, when

Cascade Company was started on January 1, Year 1, when it acquired $60,000 cash from the owners. During Year 2, the company earned cash revenues of $35,000 and incurred cash expenses of $18,100. The c...

Q: Best Auto Parts Company was started on January 1, Year 1

Best Auto Parts Company was started on January 1, Year 1, when the owners invested $120,000 cash in the business. During Year 1, the company earned cash revenues of $80,000 and incurred cash expenses...

Q: A sole proprietorship was started on January 1, Year 1,

A sole proprietorship was started on January 1, Year 1, when it received $60,000 cash from Marlin Jones, the owner. During Year 1, the company earned $35,300 in cash revenues and paid $16,200 in cash...

Q: Define sole proprietorship and discuss its advantages and disadvantages.

Define sole proprietorship and discuss its advantages and disadvantages.

Q: Indicate whether each of the following statements is true or false.

Indicate whether each of the following statements is true or false. 11. The great majority of small businesses in the United States are organized as limited liability companies. 12. The major disadvan...

Q: Solway Company is a sole proprietorship whose owner, Joe Solway,

Solway Company is a sole proprietorship whose owner, Joe Solway, has an equity interest of $50,000. Had Solway been a partnership rather than a sole proprietorship, and the two equal partners were Joe...

Q: Repeat Brief Exercise 2.8, except assume that rather than

Repeat Brief Exercise 2.8, except assume that rather than being a sole proprietorship or a partnership, Solway Company is organized as a corporation with capital stock of $48,000. How would the $60,00...

Q: Fred Gowen opened Gowen Retail Sales as a sole proprietorship and recorded

Fred Gowen opened Gowen Retail Sales as a sole proprietorship and recorded the following transactions during his first month in business: 1. Purchased $50,000 of fixed assets, putting 10% down and bo...

Q: Western Trading Company is a sole proprietorship engaged in the grain brokerage

Western Trading Company is a sole proprietorship engaged in the grain brokerage business. On December 31, 20X0, the entire grain inventory of the company was stored in outside bonded warehouses. The c...

Q: James Schuster was a sole proprietor doing business as (d.

James Schuster was a sole proprietor doing business as (d.b.a.) “Diversity Heating and Plumbing” (Diversity Heating). Diversity Heating was in the business of selling, installing, and servicing heatin...

Q: Presented below is information related to the sole proprietorship of Helen Archer

Presented below is information related to the sole proprietorship of Helen Archer, attorney. Instructions Prepare the 2020 owner’s equity statement for Helen Archerâ€
...

Q: Ms. D sold a business that she had operated as a

Ms. D sold a business that she had operated as a sole proprietorship for 18 years. On date of sale, the business balance sheet showed the following assets. The purchaser paid a lump-sum price of $30...

Q: James Jones is the owner of a small retail business operated as

James Jones is the owner of a small retail business operated as a sole proprietorship. During 2017, his business recorded the following items of income and expense. Revenue from inventory sales ……………...

Q: Calculate the total Social Security and Medicare tax burden on a sole

Calculate the total Social Security and Medicare tax burden on a sole proprietorship earning 2018 profit of $300,000, assuming a single sole proprietor.

Q: What is the maximum IRA contribution that Mr. Janson can make

What is the maximum IRA contribution that Mr. Janson can make under each of the following assumptions? a. He is age 20 and single. His only income item is $13,200 interest from a trust fund. b. He is...

Q: Can a sole proprietorship be described as a pass through entity?

Can a sole proprietorship be described as a pass through entity?

Q: On February 2, Mr. Eugene Pomeroy transferred all the assets

On February 2, Mr. Eugene Pomeroy transferred all the assets of his sole proprietorship (Pomeroy’s Ski Shop) to a newly created corporation, Pomeroy Ski Inc. In exchange for the business assets, Mr. P...

Q: Agatha is planning to start a new business venture and must decide

Agatha is planning to start a new business venture and must decide whether to operate as a sole proprietorship or incorporate. She projects that the business will generate annual cash flow and taxable...

Q: Mr. Young operates a photography studio as a sole proprietorship.

Mr. Young operates a photography studio as a sole proprietorship. His average annual income from the business is $100,000. Because Mr. Young does not need the entire cash flow for personal consumption...

Q: This year, Mr. Pitt’s sole proprietorship generated a $17

This year, Mr. Pitt’s sole proprietorship generated a $17,000 net loss. Can Mr. Pitt use this loss as a net operating loss carry forward deduction?

Q: Mr. and Mrs. Lukert own a sole proprietorship and have

Mr. and Mrs. Lukert own a sole proprietorship and have no other source of income. This year, they paid $11,674 Massachusetts income tax, all of which is attributable to their business profit. Can they...

Q: Collin Products received notice of a $21,000 income tax

Collin Products received notice of a $21,000 income tax deficiency plus $4,300 interest. The deficiency related to an incorrect method of accounting for business inventory. Compute the after-tax cost...

Q: How do the procedures for closing Income Summary of a corporation differ

How do the procedures for closing Income Summary of a corporation differ from those of a sole proprietorship or partnership?

Q: How do owners’ equity accounts in a corporation differ from those in

How do owners’ equity accounts in a corporation differ from those in a sole proprietorship or partnership?

Q: What advantages does a sole proprietorship offer? What is a major

What advantages does a sole proprietorship offer? What is a major drawback of this type of organization?

Q: Why is a sole proprietorship the simplest form of business?

Why is a sole proprietorship the simplest form of business?

Q: Jack operates a plumbing business as a sole proprietorship and uses the

Jack operates a plumbing business as a sole proprietorship and uses the cash method. Besides providing plumbing services, Jack also sells plumbing supplies to homeowners and other plumbers. The sales...

Q: Rod Clooney purchases Agnes Mitchell's sole proprietorship for $990,000

Rod Clooney purchases Agnes Mitchell's sole proprietorship for $990,000 on August 15, 2018. The assets of the business are as follows: a. Calculate Agnes's realized and recognized gain. b. Determine...

Q: In 2018, Susan's sole proprietorship earns $300,000 of

In 2018, Susan's sole proprietorship earns $300,000 of self-employment net income (after the deduction for one-half of self-employment tax). Calculate the maximum amount Susan can deduct for contribut...

Q: Falcon has a sole proprietorship that owns a silver mine that she

Falcon has a sole proprietorship that owns a silver mine that she purchased several years ago for $925,000. The adjusted basis at the beginning of the year is $400,000. For the year, Falcon deducts de...

Q: Wayside Fruit Company is a sole proprietorship owned by Neil Stephenson.

Wayside Fruit Company is a sole proprietorship owned by Neil Stephenson. The company's records reflect the following: Compute the net income before tax for book purposes and the amount of taxable in...

Q: Brennen sold a machine used in his sole proprietorship for $180

Brennen sold a machine used in his sole proprietorship for $180,000. The machine was purchased eight years ago for $340,000. Depreciation up to the date of the sale for regular income tax purposes was...

Q: For many years, Saul's sole proprietorship and his related Form 1040

For many years, Saul's sole proprietorship and his related Form 1040 have had a number of AMT tax preferences and AMT adjustments. He has made the AMT calculation each year, but the calculated amount...

Q: Merideth Harper has invested $25,000 in Southwest Development Company

Merideth Harper has invested $25,000 in Southwest Development Company. The firm has recently declared bankruptcy and has $60,000 in unpaid debts. Explain the nature of payments, if any, by Merideth in...

Q: Sanjay is a single taxpayer that operates a curry cart on the

Sanjay is a single taxpayer that operates a curry cart on the streets of Baltimore. The business is operated as a sole proprietorship with no employees (Sanjay does everything). Sanjay’s Schedule C re...

Q: A sole proprietorship is worth w dollars. The owner loses a

A sole proprietorship is worth w dollars. The owner loses a lawsuit against him for y dollars, where y > w. Express algebraically the value of the personal property the owner must forfeit to pay the s...

Q: Astro Languet established Languet Products Co. as a sole proprietorship on

Astro Languet established Languet Products Co. as a sole proprietorship on January 5, 2017. At the company’s year end of December 31, 2017, the accounts had the following balances (in thousands): Cur...

Q: Julianne Gresh Predecessor operated Romper Room Day Care Romper Room, a

Julianne Gresh Predecessor operated Romper Room Day Care Romper Room, a childcare center, as a sole proprietorship for 12 years. Predecessor owed the Pennsylvania Department of Labor and Industry Offi...

Q: Devon Bishop, age 45, is single. He lives at

Devon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1112. Devon does not want $3 to go to the Presidential Election Campaign Fund....

Q: Steven established a sole proprietorship in 2012. He sold 1231 asset

Steven established a sole proprietorship in 2012. He sold 1231 asset at a loss in 2016 and 2017. He had only sold § 1231 assets at a gain before 2016. In 2018, he cou1d sell a § 1231 asset at a gain a...

Q: For each of the following independent transactions, calculate the recognize gain

For each of the following independent transactions, calculate the recognize gain or loss to the seller and the adjusted basis to the buyer. a. Kiera sells Parchment, 1nc. stock (adjusted basis $17,000...

Q: During 2018, Leisel, a single taxpayer, operates a sole

During 2018, Leisel, a single taxpayer, operates a sole proprietorship in which she matierally participates. Her proprietorship generates gross income of $142,000 and deductions of $420,000, resulting...

Q: Scott and Laura are married and will file a joint tax return

Scott and Laura are married and will file a joint tax return. Scott has a sole proprietorship (not a specified services" business) that reports net income of $300,000. The proprietorship pays W-2 wage...

Q: Ben and Molly are married and will file jointly. Ben earns

Ben and Molly are married and will file jointly. Ben earns $300,000 from his single-member LLC (a law firm). He reports his business as a sole proprietorship Wages paid by the law firm amount to $40,0...

Q: Lynn, age 45, is single and has no dependents.

Lynn, age 45, is single and has no dependents. Her income and expenses for 2018 are reported as follows. The $64,000 business income is from Apex Office Supplies Company, a sole proprietorship that...

Q: Muad, a calendar year taxpayer, is the owner of sole

Muad, a calendar year taxpayer, is the owner of sole proprietorship that uses the cash method. On February 1, 2018, she leases an office building to use in her business for $120,000 for an 18-month pe...

Q: Scott and Laura are married and will file a joint tax return

Scott and Laura are married and will file a joint tax return. Scott has a sole proprietorship (not a "specified services" business) that reports net income of $300,000. The proprietorship pays W-2 Wag...

Q: Tammy, a single taxpayer, has a part-time job

Tammy, a single taxpayer, has a part-time job at BigCo, a company in which she has no ownership interest. In addition, she owns and operates LittleCo, a sole proprietorship that is a qualified trade o...

Q: Jason and Paula are married. They file a joint return for

Jason and Paula are married. They file a joint return for 2018 on which they report taxable income before the QBI deduction of $200,000. Jason operates a sole proprietorship, and Paula is a partner in...

Q: Mr. and Mrs. Marceleno own a sole proprietorship that generates

Mr. and Mrs. Marceleno own a sole proprietorship that generates approximately $60,000 annual net profit. This business is the couple’s only source of income. In April, June, and September, they paid t...

Q: Mr. Clem invests in Series EE savings bonds. He projects

Mr. Clem invests in Series EE savings bonds. He projects that his sole proprietorship will generate a sizeable loss, and he wants to accelerate income from other sources to offset it. He could elect t...

Q: James Jones is the owner of a small retail business operated as

James Jones is the owner of a small retail business operated as a sole proprietorship. During 2018, his business recorded the following items of income and expense. Revenue from inventory sales ……….…...

Q: Mr. V sold his sole proprietorship to an unrelated party for

Mr. V sold his sole proprietorship to an unrelated party for a lump-sum price of $900,000. The contract of sale specifies that $100,000 is for a page 8-40 covenant not to compete—Mr. V’s promise not t...

Q: Ellie has operated a sole proprietorship for six years during which net

Ellie has operated a sole proprietorship for six years during which net profit has been stable and Ellie’s marginal tax rate has been a constant 24 percent. Ellie projects that her profit next year wi...

Q: Calculate the total Social Security and Medicare tax burden on a sole

Calculate the total Social Security and Medicare tax burden on a sole proprietorship earning 2019 profit of $300,000, assuming a single sole proprietor with no other earned income.

Q: Scott and Laura are married and will file a joint tax return

Scott and Laura are married and will file a joint tax return. Scott has a sole proprietorship (not a “specified services” business) that generates qualified business income of $300,000. The proprietor...

Q: Meghan, a calendar year taxpayer, is the owner of a

Meghan, a calendar year taxpayer, is the owner of a sole proprietorship that uses the cash method. On February 1, 2021, she leases an office building to use in her business for $120,000 for an 18-mont...

Q: During 2021, Leisel, a single taxpayer, operates a sole

During 2021, Leisel, a single taxpayer, operates a sole proprietorship in which she materially participates. Her proprietorship generates gross income of $142,000 and deductions of $420,000, resulting...

Q: Lynn, age 45, is single and has no dependents.

Lynn, age 45, is single and has no dependents. Her income and expenses for 2021 are reported as follows. Income— Salary ……………………………………………………………………………….$233,000 Taxable interest on corporate bonds……………...

Q: Rod Clooney purchases Kayla Mitchell’s sole proprietorship for $990,000

Rod Clooney purchases Kayla Mitchell’s sole proprietorship for $990,000 Communications on August 15, 2021. The assets of the business are: a. Calculate Kayla’s real...

Q: Dedriea contributes to her wholly owned corporation some tangible personal property she

Dedriea contributes to her wholly owned corporation some tangible personal property she had used in her sole proprietorship business and depreciated. She had acquired the property for $566,000 and had...

Q: In 2021, Megan’s sole proprietorship earns $300,000 of

In 2021, Megan’s sole proprietorship earns $300,000 of self-employment net income (after the deduction for one-half of self-employment tax). a. Calculate the maximum amount that Megan can deduct for c...

Q: Devon Bishop, age 45, is single. He lives at

Devon Bishop, age 45, is single. He lives at 1507 Rose Lane, Albuquerque, NM 87131. His Social Security number is 111-11-1117. Devon did not engage in any virtual currency transactions during the year...

Q: Steven established a sole proprietorship in 2015. He sold $1231

Steven established a sole proprietorship in 2015. He sold $1231 assets at a loss in 2019 and 2020. He had only sold $1231 assets at a gain before 2019. In 2021, he could sell a $1231 asset at a gain a...

Q: WAR (We Are Rich) has been in business since 1985

WAR (We Are Rich) has been in business since 1985. WAR is an accrual method sole proprietorship that deals in the manufacturing and wholesaling of various types of golf equipment. Hack & Hack CPAs...

Q: Tawana owns and operates a sole proprietorship and has a 37 percent

Tawana owns and operates a sole proprietorship and has a 37 percent marginal tax rate. She provides her son, Jonathon, $8,000 a year for college expenses. Jonathon works as a pizza delivery person eve...

Q: Astro Languet established Languet Products Co. as a sole proprietorship on

Astro Languet established Languet Products Co. as a sole proprietorship on January 5, 2020. At the company's year end of December 31, 2020, the accounts had the following balances (in thousands): A...

Q: Waldo is planning to start a clothing store helping big and tall

Waldo is planning to start a clothing store helping big and tall men blend in with the crowd. Explain to Waldo the advantages and disadvantages of a corporation in comparison to a sole proprietorship...

Q: 1. Which of the following is not an advantage of the

1. Which of the following is not an advantage of the corporate form for organizations: a. Ownership rights are easily transferable b. Continuous life c. Corporate taxation d. Ease of capital accumulat...

Q: Complete requirement a of Problem 11-22A using an Excel spreadsheet

Complete requirement a of Problem 11-22A using an Excel spreadsheet. Data from Problem 11-22A: Cascade Company was started on January 1, Year 1, when it acquired $60,000 cash from the owners. During...

Q: Interview the owner/manager of a sole proprietorship or a general

Interview the owner/manager of a sole proprietorship or a general partnership. What characteristics of that business form led the owner to choose it? Does he or she ever contemplate changing the form...

Q: Val is opening a hair salon, but she does not know

Val is opening a hair salon, but she does not know what business form it should take. Tell her about the advantages and disadvantages of operating as a sole proprietorship versus a corporation. 

Q: Assume for each of the following independent cases that the annual accounting

Assume for each of the following independent cases that the annual accounting period ends on December 31 and that the total of all revenue accounts was $150,000 and the total of all expense accounts w...

Q: S & X Co. is a retail store owned solely by

S & X Co. is a retail store owned solely by Joe Saunder. During the month of November, the equity accounts were affected by the following events. Instructions: a. Assuming that the business is o...

Q: Branson Electric prepared the following condensed income statements for two successive years

Branson Electric prepared the following condensed income statements for two successive years. At the end of 2020 (right-hand column), the inventory was understated by $40,000, but the error was not d...

Q: Assume that you have recently obtained your scuba instructor’s certification and have

Assume that you have recently obtained your scuba instructor’s certification and have decided to start a scuba diving school. a. Describe the advantages and disadvantages of organizing your scuba div...

Q: Interview the owners of two local small businesses. One business should

Interview the owners of two local small businesses. One business should be organized as a corporation and the other as either a sole proprietorship or a partnership. Inquire as to Why this form of ent...

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Q: Identifying Account Titles The following are independent situations. a

Identifying Account Titles The following are independent situations. a. A new company is formed and sells 100 shares of $1 par value stock for $12 per share to investors. b. A company purchases for $1...

Q: Assume for each of the following independent cases that the annual accounting

Assume for each of the following independent cases that the annual accounting period ends on December 31. Revenues for the year were $144,000. Expenses for the year were $164,000. Case A: Assume that...

Q: Assume for each of the following independent cases that the annual accounting

Assume for each of the following independent cases that the annual accounting period ends on December 31. Revenues for the year were $288,000. Expenses for the year were $328,000. Case A: Assume that...

Q: The income statement shown below was prepared by Karen Carter, owner

The income statement shown below was prepared by Karen Carter, owner of Karen’s Beauty Supplies. The business is a sole proprietorship that sells skin and hair care products. An acco...

Q: Why are assets of an existing sole proprietorship revalued when they are

Why are assets of an existing sole proprietorship revalued when they are transferred to a partnership?

Q: Is Allowance for Doubtful Accounts brought forward from the general ledger of

Is Allowance for Doubtful Accounts brought forward from the general ledger of a sole proprietorship when the firm’s assets and liabilities are being transferred to the partnership? Why?

Q: For several years, Herschel Anderson had operated Management Consulting Company as

For several years, Herschel Anderson had operated Management Consulting Company as its sole proprietor. On January 1, 20X1, he formed a partnership with Richard Harris to operate the company under the...

Q: Wade Wilson operates a sole proprietorship business that sells golf equipment.

Wade Wilson operates a sole proprietorship business that sells golf equipment. In 20X1, Wilson agrees to transfer his assets and liabilities to a partnership that will operate The Golf Shop. Wilson wi...

Q: Samuel Cox, owner of Cox Video Center, sent the income

Samuel Cox, owner of Cox Video Center, sent the income statement shown below to several of his creditors who had asked for financial statements. The business is a sole proprietorship that sells audio...

Q: Concept Integration. You’ve developed considerable expertise in setting up new manufacturing

Concept Integration. You’ve developed considerable expertise in setting up new manufacturing plants, and now you’d like to strike out on your own as a consultant who advises other companies. However,...