SWFT Corp Partner Estates Trusts
42nd Edition
ISBN: 9780357161548
Author: Raabe
Publisher: Cengage
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J. Kamas and G. Charrier have been operating a catering business for several years. In March, the partners plan to expand by opening a retail sales shop. They have decided to form the business as a corporation called Traveling Gourmet, Incorporated. The following transactions occurred in March:
Received $96,000 cash from each of the two shareholders to form the corporation, in addition to $3,600 in accounts receivable, $8,500 in equipment, a van (equipment) appraised at a fair value of $16,200, and $2,000 in supplies. Gave the two owners each 820 shares of common stock with a par value of $1 per share.
Purchased a vacant store for sale in a good location for $520,000, making a $104,000 cash down payment and signing a 10-year mortgage note from a local bank for the rest.
Borrowed $66,000 from the local bank on a 10 percent, one-year note.
Purchased food and paper supplies costing $13,400 in March; paid cash.
Catered four parties in March for $5,800; $1,920 was billed and the rest was…
In June 2020, Shalimar organized a corporation to provide aerial photography services. The company, called Aerial Views, began operations immediately. Transactions during the month of June were as follows:
June 1 The corporation issued 70,000 shares of capital stock to Wendy Winger in exchange for $140,000 cash.
June 2 Purchased a plane from Utility Aircraft for $240,000. Made a $40,000 cash down
payment and issued a note payable for the remaining balance.
June 4 Paid Woodrow Airport $2,200 to rent office and hangar space for the month.
June 15 Billed customers $8,520 for aerial photographs taken during the first half of June.
June 15 Paid $6,880 in salaries earned by employees during the first half of June.
June 18 Paid Hannigan’s Hangar $1,990 for maintenance and repair services on the company plane.
June 25 Collected $4,900 of the amounts billed to customers on June 15.
June 30 Billed customers $17,450 for aerial photographs taken during the second half of the month.
June 30 Paid…
Kathy Wintz formed a lawn service business as a summer job. To start the corporation on May 1, 2018, she deposited $1,000 in a new bank account in the name of the business. The $1,000 consisted of a $600 loan from Bank One to her company, Wintz Lawn Service, and $400 of her own money. The company issued $400 of common stock to Wintz. Wintz rented lawn equipment, purchased supplies, and hired other students to mow and trim customers’ lawns.
At the end of each month, Wintz mailed bills to the customers. On August 31, she was ready to dissolve the corporation and return to college. Because she was so busy, she kept few records other than the checkbook and a list of receivables from customers.
At August 31, the business’s checkbook shows a balance of $2,000, and customers still owe $750. During the summer, the business collected $5,500 from customers. The business checkbook lists payments for supplies totaling $400 and it still has gasoline, weed trimmer cord, and other supplies that cost…
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- Mary began a business, and after collecting $30,000 from an equity investor and borrowing $15,000 from a bank, she purchased piece of land for $40,000. During the year, she leased the land to Karl and received $12,000 in cash, paying $14,000 cash for expenses. She paid a $1,000 dividend to the equity investor at year.-end Prepare an income statement, a statement of shareholders’ equity, a balance sheet, and a statement of cash flows for the period. Evaluate Mary’s decision to pay the $1,000 dividend.arrow_forwardJax, Jewels, and James organized Big Three as a corporation; each contributed $24,000 cash to start the business and received shares of stock. The store completed its first year of operations on December 31, 2019. On that date, the following financial items for the year were determined: cash on hand and in the bank, $24,300; amounts due from customers from sales of books, $29,900; equipment, $56,900; amounts owed to publishers for books purchased, $8,200; one-year notes payable to a local bank for $29,000. No dividends were declared or paid to the stockholders during the year. On December 31, 2020, what are Big Three’s total assets? $______arrow_forwardJack, a geologist, had been debating for years whether or not to venture out on his own and operate his own business. He had developed a lot of solid relationships with clients, and he believed that many of them would follow him if he were to leave his current employer. As part of a New Year’s resolution, Jack decided he would finally do it. Jack put his business plan together, and, on January 1 of this year, Jack opened his doors for business as a C corporation called Geo-Jack (GJ). Jack is the sole shareholder. Jack reported the following financial information for the year (assume GJ reports on a calendar year, uses the accrual method of accounting, and elects to account for inventory). In January, GJ rented a small business office about 12 miles from Jack’s home. GJ paid $10,000, which represented a damage deposit of $4,000 and rent for two years ($3,000 annually). GJ earned and collected $290,000 performing geological-related services and selling its specialized digging tool. GJ…arrow_forward
- In May, Parr and Presba, while in the course of negotiations with Barker (a salesperson for Quaker Hill) to purchase plants and flowers, undertook to organize a corporation to be named the Denver Memorial Nursery, Inc. On May 14 and 16, Parr signed two orders on behalf of Denver Memorial Nursery, Inc., which, to the knowledge of Quaker Hill, was not yet formed, that fact being noted in the contract. A down payment in the amount of $1,000 was made. The corporation was not formed prior to entering into the contract because Quaker Hill insisted that the deal be concluded at once since the growing season was rapidly passing. Under the contract, the balance of the purchase price was not due until the end of the year. The plants and flowers were shipped immediately and arrived on May 26. The Denver Memorial Nursery, Inc., was never formed. Quaker Hill seeks to recover the unpaid balance of the purchase price from Parr and Presba. a. What are the arguments that Parr and Presba are personally…arrow_forwardTwo individuals organized Teacup company as a corporation; each contributed $27,000 cash to start the business and received shares of stock. The store completed its first year of operations on December 31, 2020. On that date, the following financial items for the year were determined: cash on hand and in the bank, $29,400; amounts due from customers from sales of books, $22,500; equipment, $58,900; amounts owed to publishers for books purchased, $7,000; one-year notes payable to a local bank for $23,200. No dividends were declared or paid to the stockholders during the year. On December 31, 2020, what is the total retained earnings of Teacup? $______arrow_forwardKen Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $48,000 cash to start the business and received 4,000 shares of stock. The store completed its first year of operations on December 31, 2020. On that date, the following financial items for the year were determined: cash on hand and in the bank, $43,500; amounts due from customers from sales of books, $27,800; equipment, $47,000; amounts owed to publishers for books purchased, $8,300; one-year notes payable to a local bank for $4,200. No dividends were declared or paid to the stockholders during the year. Using the retained earnings equation and an opening balance of $0, work backwards to compute the amount of net income for the year ended December 31, 2020.arrow_forward
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