Wheeler Electrical Supplies, Inc.

1426 Words Dec 6th, 2015 6 Pages
Wheeler Electrical Supplies, Inc. is a C corporation that used to be owned by four individuals. Because the business has been operating at a loss for the past several years, three out of the four shareholders decided to sell their outstanding shares to Angela Clay, the one shareholder convinced that becoming the sole owner herself will allow her to run a profitable business again.
Ever since Angela has become the 100% owner of Wheeler she has concerns about some possible negative goodwill that Wheeler might have. She is also worried that the corporation might not be employing the best practice to dispose of hazardous waste; she fears that a personal liability might arise from that practice. Also, Angela does not like the idea of the Texas franchise tax that Wheeler is subject to. Because of the above concerns Angela is contemplating the idea of liquidating the corporation and reorganizing the business as a sole proprietorship.
Since the business does not have enough funds to continue paying its long-term financial obligations, as repayment of debt Angela has decided to exchange Wheeler’s accounts receivable for an $80,000 corporate note payable by the corporation. The remaining assets will be distributed to Angela and she will assume personal liability for the other accounts payable. Furthermore, Wheeler will distribute the real property to Angela who will assume personal liability for the repayment of the mortgage.
Wheeler expects to generate a $50,000 loss through July 31.…
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