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leva [86]
3 years ago
12

Jonathan (an individual) owns 100% of the stock of Husky, Inc. (a C corporation) and 100% of the stock of Calhoun, Inc. (another

C Corporation). Calhoun, Inc. is very successful and has millions in earnings and profits. Husky has not fared so well and has no earnings and profits. In the current year, Husky ran out of cash and could not make its payroll. Because of this situation, Jonathan directed Calhoun, Inc. to pay $100,000 in wages to employees of Husky. The $100,000 payment was not structured as a loan.
A. How should Calhoun, Inc. treat the $100,000 payment for tax purposes?
B. How should Jonathan treat the $100,000 payment for tax purposes?
Business
1 answer:
BaLLatris [955]3 years ago
8 0

Answer: A. As Expenses

B. No treatment.

Explanation:

A. The $100,000 was not structured and a loan so it will be accounted for as EXPENSES. This means that it will be deducted from the Income for the year from Calhoun's books.

B. A C Corporation is by definition taxed SEPARATELY from it's owners in the United States of America. Seeing as both Corporations were C Corporations, Jonathan as the owner of both companies need not worry about how he should treat the $100,000 payment as he will not ne taxed on it.

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At December 31, 2021 and 2020, P Co. had 58,000 shares of common stock and 5,800 shares of 5%, $100 par value cumulative preferr
Finger [1]

Answer:

$10.19 per share

Explanation:

With regards to the above, the basic earnings per common share is seen below;

Preferred dividend = Shares × Par value × Shares percentage

= 5,800 × $100 × 5%

= $29,000

So, basic earning per share = (Net income - Preferred dividend) ÷ Common shares

= ($620,000 - $29,000) ÷ 58,000

= $10.19 per share

Therefore, for 2021, basic earnings per common share amounted to $10.19

6 0
3 years ago
Maxim County just completed construction of a new town hall to be used for its governmental offices. The employees have moved in
Svet_ta [14]

Answer:

The answers are:

B) Transfer the remaining funds to the debt service fund which will be handling the long-term debt incurred for the construction of the building.

C) Return the excess to the source of the restricted funding.

Explanation:

The fund balance of $12,000, means that the money left over was $12,000. When a government entity's project has a left over or excess, called surplus, it must first return it to the debt service fund.

At the end of the construction project if any money is left over, it must be returned to the source of the restricted funding.  

5 0
3 years ago
In March 2021, the Phillips Tool Company signed two purchase commitments. The first commitment requires Phillips to purchase inv
xeze [42]

Answer:

Journal entries

Date               Account title and explanation    PR. No.    Debit ($)    Credit ($)

June 15,2021        Purchases                                             $85,500

                             Loss on purchase commitment           $15,000

                             Cash                                                                        $100,000

                       (To record the payment for the loss on

                         purchase commitment)

June 30,2021  Estimated loss on purchase

                        commitment                                                $10,600

                           Estimated liability on purchase

                        commitment                                                                   $10,600

                       (To record the loss on purchase commitment)

Aug 30,2021        Purchases                                             $120,500

                             Loss on purchase commitment           $19,900

                            Estimated liability on purchase

                             commitment                                           $10,600

                           Cash                                                                           $151,000

                       (To record the payment for the loss on purchase commitment)

Explanation:

For June 15,  Loss on purchase commitment = Signed value of inventory - Market value of inventory = $100,000 - $85,500 = $14,500

For June 30, Loss on purchase commitment = Signed value of inventory - Market value of inventory = $151,000 - $140,400 = $10,600

For Aug 30, Loss on purchase commitment = Market price of inventory at June 30 - Market value of inventory at August 30 = $140,400 - $120,500 = $19,900

4 0
3 years ago
What are the different types of banking institutions
Otrada [13]

Central Banks, Retail Banks, Commercial Banks, Shadow Banks, Investment Banks, Cooperative Banks, Credit Unions.

5 0
3 years ago
Assume J. K. Lumber increases its operating efficiency such that costs decrease while sales remain constant. As a result, given
Mars2501 [29]

Answer:

D) return on equity will increase.

Explanation: Return on equity is a financial term that explains the net income of a business venture. There are several ways through which the return on equity can be improved or increased in business.

(1) Reduction in the cost of operations or production of goods and services

(2) increase in the price of the product etc.

If the cost of producing a given Quantity of goods is reduced with sales remaining constant,THE RETURN ON EQUITY WILL INCREASE AS A RESULT OF THE INCREASE IN NET INCOME DUE TO REDUCED COST OF OPERATIONS OR PRODUCTION OF GOODS.

7 0
2 years ago
Read 2 more answers
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