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Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively. Sales revenue UpAHill Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Cost of goods sold Salary to owners Jack and Jill Employee wages Depreciation expense Miscellaneous expenses Interest income (unrelated to business) Qualified dividend income Overall net income Year 1 $ 175,000 Year 2 $ 310,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000) (10,000) (15,000) (7,500) (9,000) 2,000 2,500 500 1,000 $ 45,000 $ 134,500 a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years. Answer is complete but not entirely correct. Jack Jill Ordinary income Year 1 $ 11,125 Year 2 $ 33,375 Year 1 Year 2 $ 33,375 $ 100,125 Qualified business income $ 10,625 $ Interest income $ 500 32,750 S 625 $ 31,875 $ 98,250 $ 1,500 S 1,875 Dividend income S 125 S 250 S 375 S 750 Allocated wages S 3,750 $ 5,000 $ 11,250 $ 15,000 × Unadjusted basis of qualified property $ 25,000 $ 25,000 $ 75,000 $ 75,000

Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively. Sales revenue UpAHill Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Cost of goods sold Salary to owners Jack and Jill Employee wages Depreciation expense Miscellaneous expenses Interest income (unrelated to business) Qualified dividend income Overall net income Year 1 $ 175,000 Year 2 $ 310,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000) (10,000) (15,000) (7,500) (9,000) 2,000 2,500 500 1,000 $ 45,000 $ 134,500 a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years. Answer is complete but not entirely correct. Jack Jill Ordinary income Year 1 $ 11,125 Year 2 $ 33,375 Year 1 Year 2 $ 33,375 $ 100,125 Qualified business income $ 10,625 $ Interest income $ 500 32,750 S 625 $ 31,875 $ 98,250 $ 1,500 S 1,875 Dividend income S 125 S 250 S 375 S 750 Allocated wages S 3,750 $ 5,000 $ 11,250 $ 15,000 × Unadjusted basis of qualified property $ 25,000 $ 25,000 $ 75,000 $ 75,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively. Sales revenue UpAHill Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Cost of goods sold Salary to owners Jack and Jill Employee wages Depreciation expense Miscellaneous expenses Interest income (unrelated to business) Qualified dividend income Overall net income Year 1 $ 175,000 Year 2 $ 310,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000) (10,000) (15,000) (7,500) (9,000) 2,000 2,500 500 1,000 $ 45,000 $ 134,500 a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years. Answer is complete but not entirely correct. Jack Jill Ordinary income Year 1 $ 11,125 Year 2 $ 33,375 Year 1 Year 2 $ 33,375 $ 100,125 Qualified business income $ 10,625 $ Interest income $ 500 32,750 S 625 $ 31,875 $ 98,250 $ 1,500 S 1,875 Dividend income S 125 S 250 S 375 S 750 Allocated wages S 3,750 $ 5,000 $ 11,250 $ 15,000 × Unadjusted basis of qualified property $ 25,000 $ 25,000 $ 75,000 $ 75,000
Transcribed Image Text:Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively. Sales revenue UpAHill Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Cost of goods sold Salary to owners Jack and Jill Employee wages Depreciation expense Miscellaneous expenses Interest income (unrelated to business) Qualified dividend income Overall net income Year 1 $ 175,000 Year 2 $ 310,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000) (10,000) (15,000) (7,500) (9,000) 2,000 2,500 500 1,000 $ 45,000 $ 134,500 a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years. Answer is complete but not entirely correct. Jack Jill Ordinary income Year 1 $ 11,125 Year 2 $ 33,375 Year 1 Year 2 $ 33,375 $ 100,125 Qualified business income $ 10,625 $ Interest income $ 500 32,750 S 625 $ 31,875 $ 98,250 $ 1,500 S 1,875 Dividend income S 125 S 250 S 375 S 750 Allocated wages S 3,750 $ 5,000 $ 11,250 $ 15,000 × Unadjusted basis of qualified property $ 25,000 $ 25,000 $ 75,000 $ 75,000
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