Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Chapter 12, Problem 2QS
a)
To determine
The amount, which the creditors can take from Person C’s personal assets when the business is set up as a limited liability company?
b)
To determine
The amount, which the creditors can take from Person C’s personal assets when the business is set up as an S corporation?
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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 company
Suppose 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
Liability comparisons Nerissa Smith has invested $25,000 in Northeast Productions Company. The firm has recently declared bankruptcy and has $60,000 in unpaid debts. Explain the nature of Nerissa's personal liabilit , if any, in each of the following situations.
a. Northeast Productions Company is a sole proprietorship owned by Ms. Smith.
b. Northeast Productions Company is a 50-50 general partnership of Nerissa Smith and Roger Brown.
c. Northeast Productions Company is a limited partnership where Nerissa Smith is a limited partner.
d. Northeast Productions Company is a corporation.
1) If Northeast Productions Company is a 50-50 partnership of Nerissa Smith and Roger Brown,: (Select the best answer below.)
A.Ms. Smith has unlimited liability, which means creditors can only claim against the $25,000 she invested.
B.Ms. Smith has limited liability, which is $30,000, or half of the $60,000 in unpaid debts.
C.Ms. Smith has unlimited liability, which means creditors…
Chapter 12 Solutions
Principles of Financial Accounting.
Ch. 12 - Prob. 1MCQCh. 12 - Prob. 2MCQCh. 12 - Prob. 3MCQCh. 12 - Prob. 4MCQCh. 12 - Prob. 5MCQCh. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQ
Ch. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - Prob. 10DQCh. 12 - Prob. 11DQCh. 12 - Prob. 12DQCh. 12 - Prob. 1QSCh. 12 - Prob. 2QSCh. 12 - Prob. 3QSCh. 12 - Prob. 4QSCh. 12 - Prob. 5QSCh. 12 - Prob. 6QSCh. 12 - Prob. 7QSCh. 12 - Prob. 8QSCh. 12 - The Field, Brown Snow partnership was begun with...Ch. 12 - Prob. 10QSCh. 12 - Determine whether each characteristic describes a...Ch. 12 - For each separate case, indicate which type of...Ch. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Prob. 12ECh. 12 - Prob. 13ECh. 12 - Prob. 14ECh. 12 - Prob. 15ECh. 12 - Prob. 1APCh. 12 - Prob. 2APCh. 12 - Prob. 3APCh. 12 - Prob. 4APCh. 12 - Prob. 5APCh. 12 - Prob. 6APCh. 12 - Prob. 1BPCh. 12 - Prob. 2BPCh. 12 - Prob. 3BPCh. 12 - Prob. 4BPCh. 12 - Prob. 5BPCh. 12 - Prob. 6BPCh. 12 - Prob. 12SPCh. 12 - Prob. 1AACh. 12 - Prob. 2AACh. 12 - Review Samsungs 1938 to 1970 history at...Ch. 12 - Prob. 1BTNCh. 12 - Prob. 2BTNCh. 12 - Prob. 3BTNCh. 12 - Prob. 5BTN
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