Stephen Wadson and Mary Shively, two professionals in the finance area, have worked for Morrisen Leasing for a number of years. Morrisen Leasing is a company that leases high-tech medical equipment to hospitals. Stephen and Mary have decided that, with their financial expertise, they might start their own company to perform consulting services for individuals interested in leasing equipment. One form of organization they are […]

Alexandra and Kellie operate a beauty salon as partners who share profits and losses equally. The success of their business has exceeded their expectations; the salon is operating quite profitably. Kellie is anxious to maximize profits and schedules appointments from 8 a.m. to 6 p.m. daily, even sacrificing some lunch hours to accommodate regular customers. Alexandra schedules her appointments from 9 a.m. to 5 p.m. […]

As this chapter indicates, the partnership form of organization has advantages and disadvantages. The chapter noted that different types of partnerships have been developed to minimize some of these disadvantages. Alternatively, an individual or company can choose the proprietorship or corporate form of organization. Instructions Go to two local businesses that are different, such as a restaurant, a retailer, a construction company, or a professional […]

Indicate whether each of the following statements is true or false. Similar to partners in a partnership, stockholders of a corporation have unlimited liability. It is relatively easy for a corporation to obtain capital through the issuance of stock. The separation of ownership and management is an advantage of the corporate form of business. The journal entry to record the authorization of capital stock includes […]

Santa Anita Inc. purchases 3,000 shares of its $50 par value common stock for $180,000 cash on July 1. It will hold the shares in the treasury until resold. On November 1, the corporation sells 1,000 shares of treasury stock for cash at $70 per share. Journalize the treasury stock transactions. Record the purchase of treasury stock at cost. When treasury stock is sold above […]

Jennifer Corporation has issued 300,000 shares of $3 par value common stock. It authorized 600,000 shares. The paid-in capital in excess of par on the common stock is $380,000. The corporation has reacquired 15,000 shares at a cost of $50,000 and is currently holding those shares. Treasury stock was reissued in prior years for $72,000 more than its cost. The corporation also has 4,000 shares […]

You can receive a contingent fee for preparing a tax return based on the size of the client”s refund. True or false? True. Incorrect. Tax preparation is not a situation in which a contingent fee can be charged. False. Correct. A contingent fee cannot be charged for tax return preparation. A contingent fee can be charged only in certain limited situations, including services in connection […]

Anders Corporation has issued 100,000 shares of $5 par value common stock. It authorized 500,000 shares. The paid-in capital in excess of par on the common stock is $240,000. The corporation has reacquired 7,000 shares at a cost of $46,000 and is currently holding those shares. Treasury stock was reissued in prior years for $47,000 more than its cost. The corporation also has 2,000 shares […]

A taxpayer requests records from a preparer that must be attached to his tax return. He has not paid the preparation fees yet. If state law permits retention of client records in cases of nonpayment of fees, the preparer may retain the taxpayer”s records. True or false? True. Incorrect. You must turn over records needed to be attached to a tax return, regardless of outstanding […]

Andrea has prepared the following list of statements about corporations. A corporation is an entity separate and distinct from its owners. As a legal entity, a corporation has most of the rights and privileges of a person. Most of the largest U.S. corporations are privately held corporations. Corporations may buy, own, and sell property; borrow money; enter into legally binding contracts; and sue and be […]