2. Bill lives in Macon, Georgia. However, he just bought fifty shares of stock in a large business headquartered in Chicago, Illinois. Bill's stock gives him a small piece of ownership in the business at limited financial risk. It sounds like Bill has invested in a A. sole proprietorship. B. corporation. C. partnership. D. franchise.
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- Franklin, John, Henry, and Harry have decided to pool their financial resources and business skills in order to open up and run a coffee shop. They will share any profits or losses that the business generates and will be personally responsible for making good on any debt that their business undertakes. Their business should be classified as a. corporation. b. sole proprietorship. c. partnership. d. none of the above.6 Jeremy and Patricia are a married couple that want to purchase a bakery franchise. profit for the franchise last year was $1 million. They are considering purchasing the business as a partnership or through a proprietary limited company. What id s downside of incorporation in these circumstances? Perpetual succession. A separate legal entity for contracts. Compliance and reporting obligations and on-going registration fees. Limited liability for members of the companySuppose you form a legal partnership with your best friend, and she purchases consulting services calling for a $100,000 fee. Your business is broke, and you never wanted the consultants to work for you-only your partner did. For how much of this debt are you legally liable? O a. The proportion reflected by the proportion of the business owned O b. Only an amount equal to the assets of the business O c. All of the $100,000 O d. $50,000 O e. $25,000
- 5). Leno Hardware is owned and operated as a sole proprietorship by Larry Leno. The location is excellent, and he is approached by a buyer, Hard Bargains Inc., a national chain of hardware stores. What are the tax consequences in the following situations? Larry sells the store for cash. Larry sells the store for marketable stock in Hard Bargains. Larry incorporates the store and exchanges the stock for shares in Hard Bargains. Same as (c), but Larry incorporated his hardware store two years earlier.Why the maximization of shareholders wealth overrules the objective of maximizingearnings?b) How does being a limited partner in a business enterprise differ from being a stockholder,assuming the same percentage of ownership?c) If you are scheduled to receive a certain sum of money five years from now but wish tosell your contract for its present value, which type of compounding would you prefer tobe used in the calculation? Why?d) John Selvester is 47 years old and is presently experiencing the “good” life. As a result,he anticipates that he will increase his weight at a rate of 4 percent a year. At present heweighs 250 pounds. What will he weigh at age 60?e) Allen wishes to purchase an annuity contract that will pay him $8,000 a year for the restof his life. The State Life Insurance Company figures that his life expectancy is 25 years,based on its actuary tables. The company imputes a compound annual interest rate of 6percent in its annuity contracts. How much will Allen have to pay…Kelvin is considering buying shares in a company. Kelvin asks you to explain to him what is meant by ?he ?erm? ?member? and ??hareholder?? and ?he differen? ?a?? in ?hich a person may become a member. He also asks you to explain who may be eligible to become a member, and how many members a company is permitted ?o ha?e? Finall?? Kel?in a?k? ?How does a person cease to be a member of a company??Required: Advise Kelvin.
- Marty Byrd is debating setting up his new business venture as a corporation. He comes to you for advice. What would you tell him? Include at least 3 advangates and 1 disadvantage to incorporatingNicholas is a software engineer and is starting a consulting practice. What form of businessorganization limits his liability to the amount he has invested in the business?a. Proprietorshipb. Partnershipc. Corporationd. None of the above____ 44. A corporation purchased 1,000 shares of its own $5 par common stock at $10 and subsequently sold 500 of the shares at $20. What is the amount of income realized from the sale? a. $0 b. $5,000 c. $2,500 d. $10,000 ____ 45. A partner withdraws from a partnership by selling her interest to another person who currently is not associated with the firm. As a result of this transaction, the capital account balance of the other partners in the partnership a. will increase b. will decrease c. will remain the same d. may increase, decrease, or remain the same ____ 46. What is the total stockholders' equity based on the following account balances? Common Stock $400,000 Paid-In Capital in Excess of Par 40,000 Retained Earnings 190,000 Treasury Stock 20,000 a. $640,000 b. $630,000 c. $610,000 d. $650,000 ____ 47. X and Y have original…
- Mr. Ali started business with a small amount of capital and he is responsible for all his losses and he has the right over all the profits of the business. Which form of business organization Mr. Ali has started? O-a. Sole Proprietor Ob. All the options are wrong Oc Company O d. PartnershipYour high school friend started a business that has blossomed over the years, and he is considering incorporating so he can sell shares of stock and expand. He has asked you for help understanding the costs of incorporating. What are some of the costs that he will face as he organizes the corporation and begins to sell shares of stock?(2) Example 3 (Equity: Business Ownership): Hanna, Ursula, Thomas and Günther engage in a partnership named "Chick Enterprise. // Chick generates a net income of 75.000 $. 1) Ursula, Thomas and Günther get salary allowances for thei extra professional service for At clients, as follows: 12.000$ for Ursula; 9.000 $ for Thomas and 3.000 for Günther respectively. 11) Average capital balances during the year are as follows: Hanna Ursula Thomas Gunther 42.000 $ 4.200 $ 12.600 $ 25.200 $ Partners agreed for a 7.25 interest allowance for each partner at the end of the year. 84.000 $ [II) After salary & interest allowances, the remainder will be allocated from a fixed ratio of [5:2:4:1] for [Hanna: Ursula: Thomas: Günther Find each partner's capital (equity) and do the closing entry Example 4 (Equity: Business Ownership): Royal Inc. posesses a capital structure as follows: Luis 20 Hector 10 Sanchez 10 (in.000 $) 2) On March 1, Luis decides to sell 10 $ of his share to Martin. 3) On May 1,…