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Chapter 1: 1-5QS (page 43)

Complete the following table with either a yes or no regarding the attributes of a proprietorship, partnership, and corporation.

Attribute Present Proprietorship Partnership Corporation 1. Business taxed . . . . . . . . . . . . . . . . . 2. Business entity . . . . . . . . . . . . . . . . . 3. Legal entity .

Short Answer

Expert verified

A partnership is a business in which more than one person works and shares profits or losses. The required table is prepared in ‘step 2’

Step by step solution

01

Definition of partnership

A partnership is an agreement in which two or more people come together to carry out a business and share its profits and losses accordingly.

02

Table

Attribute present

Proprietorship

Partnership

Corporation

1 Business Taxed

No

No

Yes

2. Business Entity

Yes

Yes

Yes

3 Legal Entity

No

NO

Yes

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Most popular questions from this chapter

Why is the revenue recognition principle needed? What does it demand?

As of December 31, 2017, Armani Company’s financial records show the following items and amounts.

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000

Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000

Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000

Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000

Retained earnings, Dec. 31, 2016 . . . . . . . . . . . . . . . . 4,000

Retained earnings, Dec. 31, 2017 . . . . . . . . . . . . . . . . 6,000

Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000

Consulting revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,000

Rental revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000

Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000

Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000

Selling and administrative expenses . . . . . . . . . . . . . . 8,000

Required Prepare the 2017 year-end income statement for Armani Company

Gabi Gram started The Gram Co., a new business that began operations on May 1. The Gram Co. completed the following transactions during its first month of operations.

May 1 G. Gram invested \(40,000 cash in the company in exchange for its common stock.

1 The company rented a furnished office and paid \)2,200 cash for May’s rent.

3 The company purchased \(1,890 of office equipment on credit.

5 The company paid \)750 cash for this month’s cleaning services.

8 The company provided consulting services for a client and immediately collected \(5,400 cash.

12 The company provided \)2,500 of consulting services for a client on credit.

15 The company paid \(750 cash for an assistant’s salary for the first half of this month.

20 The company received \)2,500 cash payment for the services provided on May 12.

22 The company provided \(3,200 of consulting services on credit.

25 The company received \)3,200 cash payment for the services provided on May 22.

26 The company paid \(1,890 cash for the office equipment purchased on May 3.

27 The company purchased \)80 of advertising in this month’s (May) local paper on credit; cash payment is due June 1.

28 The company paid \(750 cash for an assistant’s salary for the second half of this month.

30 The company paid \)300 cash for this month’s telephone bill.

30 The company paid \(280 cash for this month’s utilities.

31 The company paid \)1,400 cash in dividends to the owner (sole shareholder).

Required 3. Prepare the statement of cash flows for the month of May

Use the information in Exercise 1-15 to prepare an October 31 statement of cash flows for Ernst Consulting. Assume the following additional information.

a. The owner’s initial investment consists of \(38,000 cash and \)46,000 in land in exchange for its common stock.

b. The company’s \(18,000 equipment purchase is paid in cash.

c. The accounts payable balance of \)8,500 consists of the \(3,250 office supplies purchase and \)5,250 in employee salaries yet to be paid.

d. The company’s rent, telephone, and miscellaneous expenses are paid in cash.

e. No cash has been collected on the $14,000 consulting fees earned

Sanyu Sony started a new business and completed these transactions during December.

Dec. 1 Sanyu Sony transferred \(65000 cash from a personal savings account to a checking account in the name of Sony Electric in exchange for its common stock.

2 The company rented office space and paid \)1000 cash for the December rent.

3 The company purchased \(13000 of electrical equipment by paying \)4800 cash and agreeing to pay the \(8200 balance in 30 days.

5 The company purchased office supplies by paying \)800 cash.

6 The company completed electrical work and immediately collected \(1200 cash for these services.

8 The company purchased \)2530 of office equipment on credit.

15 The company completed electrical work on credit in the amount of \(5000.

18 The company purchased \)350 of office supplies on credit.

20 The company paid \(2530 cash for the office equipment purchased on December 8.

24 The company billed a client \)900 for electrical work completed; the balance is due in 30 days.

28 The company received \(5000 cash for the work completed on December 15.

29 The company paid the assistant’s salary of \)1400 cash for this month.

30 The company paid \(540 cash for this month’s utility bill.

31 The company paid \)950 cash in dividends to the owner (sole shareholder).

Required 1. Create the following table similar to the one in Exhibit 1.9
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