Question
In: Accounting
An S corporation has the following shares outstanding on January 1, 20X1: Mary 400 shares Frank...
An S corporation has the following shares outstanding on January 1, 20X1:
Mary 400 shares
Frank 500 shares
Joe 800 shares
On June 1, Joe sells 300 of his shares of stock to Gary. The S corporation’s pass-through taxable income is $30,000. What is Gary’s pro rata share of the S corporation’s taxable income for 20X1?
A. $3,105
B. $5,294
C. $8,823
D. $14,118
Solutions
Expert Solution
When the ownership changes in the S Corporation, the allocation of income is calculated by multiplying the percentage of shares held and percentage of the year for it is owned.
Shared held by Gary in proportion of the total shares of S Corporation =
Total shares = 400 + 500 + 500 (800 - 300) + 300
= 1700
Shares held by Gary = 300
Proportion = 300 / 1700 × 100
= 17. 65%
Percentage of the year for which shares are owned by Gary =
Total number of days in a year = 365 days
Number of days for which shares are owned by Gary =
June = 30 days
July = 31 days
August = 31 days
September = 30 days
October = 31 days
November = 30 days
December = 31 days
Total = 214 days
Percentage of the year for which shares are owned by Gary =
214 / 365 × 100
= 58.63%
Gary's prorata share of S Corporation's taxable incomes =
$30000 × (17.65 / 100 ) × (58.63 /100)
= $3105
Note - It is assumed that the year is not a leap year, therefore 365 days of the year are considered.
Therefore, the correct answer is option (A). $3105
ekkarill92 answered 1 year agoRelated Solutions
On 1/1/20X1, Illini has 20,000 shares of $1 par common stock outstanding. On 1/1/20X1, Illini Company's...
On 1/1/20X1, Illini has 20,000 shares of $1 par common stock
outstanding. On 1/1/20X1, Illini Company's executives have 1,000
vested stock options that were awarded as compensation before.
These options permit them to buy 1,000 shares of the Illini's $1
par value common stock at an exercise price of $10. The fair value
of these options on the original option grant date was estimated at
$4 each. During 20X1 Illini Company reacquires 1,500 common shares
as treasury shares as follows:...
Hastings Corporation is interested in acquiring Vandell s Corporation. Vandell has 1 million shares outstanding and...
Hastings Corporation is interested in acquiring Vandell s
Corporation. Vandell has 1 million shares outstanding and target
capital structure consisting of 30% debt. Vandell’s has 10.82
million in debt that trades at par and pays an 8% interest rate.
Assume that the risk free rate of interest is 5% and market risk
premium is 6%. Both Hastings and Vandell’s face a 40% tax rate.
1. Vandell’s Free Cash Flow is $2 million per year and expected
to grow at a...
(a) Fenton had 5,000,000 ordinary shares in issue on 1 January 20X1. On 31 January 20X1,...
(a) Fenton had 5,000,000 ordinary shares in issue on 1 January
20X1. On 31 January 20X1, the company made a rights issue of 1 for
4 at $1.75.
The C*m rights price was $2 per share.
On 30 June 20X1, the company made an issue at full market price
of 125,000 shares.
Finally, on 30 November 20X1, the company made a 1 for 10 bonus
issue. Profit for the year was $2,900,000.
The reported EPS for year ended 31 December...
The following information is available for Bugsy Corporation: January 1, 2018 Shares outstanding &nb
The following information is available for Bugsy
Corporation:
January 1, 2018 Shares
outstanding
2,000,000
March 1, 2018 Shares
issued
570,000
April 1, 2018
Treasury shares
purchased
100,000
September 1, 2018 Shares issued
300,000
The number of shares to be used in computing earnings per common
share (WASO) for 2018 is
Select one:
2,500,000 shares
2,269,167 shares
2,583,333 shares
2,294,167 shares
The following information is available for Barone Corporation: January 1, 2013 Shares outstanding &n
The following information is available for Barone
Corporation:
January 1, 2013 Shares
outstanding
1,500,000
April 1,
2013
Shares
issued
240,000
July 1,
2013
Treasury shares
purchased
90,000
October 1, 2013 Shares
issued in a 100% stock
dividend
1,650,000
The number of shares to be used in computing earnings per common
share for 2013 is
A. 3,285,000
B. 3,390,600
C. 2,047,500
D. 3,270,000
The following information is available for Barone Corporation: January 1, 2013 Shares outstanding &n
The following information is available for Barone
Corporation:
January 1, 2013 Shares
outstanding
1,500,000
April 1,
2013
Shares
issued
240,000
July 1,
2013
Treasury shares
purchased
90,000
October 1, 2013 Shares
issued in a 100% stock
dividend
1,650,000
The number of shares to be used in computing earnings per common
share for 2013 is
A. 3,285,000
B. 3,390,600
C. 2,047,500
D. 3,270,000
PLEASE SHOW YOUR WORK!
The following information is available for a corporation: January 1st, 2020 Shares outstanding: 1,250,000 April 1,...
The following information is available for a corporation:
January 1st, 2020 Shares outstanding: 1,250,000
April 1, 2020 Shares Issued: 200,000
July 1, 2020 Purchased Treasury Stock 75,000
October 1, 2020 Issued a 2 for 1 stock split
The number of shares to be used in computing earnings per common
share for 2020 is
A) 2,737,500
B) 2,825,500
C) 2,725,000
D) 1,706,250
On January 1, 2021, Shamu Corporation had 100,000 shares of common stock outstanding. The following transactions...
On January 1, 2021, Shamu Corporation had 100,000 shares of
common stock outstanding. The following transactions occurred
during 2021:
March
1:
Reacquired 2,300 shares, accounted for as treasury stock.
September
30:
Sold all the treasury shares.
December
1:
Sold 11,300 new shares for cash.
December
31:
Reported a net income of $191,500.
The following transactions occurred during 2022:
January
10:
Declared and issued a 30% stock dividend.
December
31:
Reported a net income of $261,800.
Required:
Calculate Shamu's basic earnings...
WRT, a calendar year S corporation, has 100 shares of outstanding stock. At the beginning of...
WRT, a calendar year S corporation, has 100 shares of
outstanding stock. At the beginning of the year, Mr. Wallace owned
all 100 shares. On September 30, he gave 25 shares to his brother
and 40 shares to his daughter. WRT’s ordinary income for the year
was $216,000. What portion of this income must each shareholder
include in income? Assume 365 days in a year. (Round income per day
of ownership to 4 decimal places. Round your final answers to...
On January 1 , 2017, Newyork Capital Corporation purchased 30% of the outstanding common shares of...
On January 1 , 2017, Newyork Capital Corporation purchased 30%
of the outstanding common shares of Delta Crating Corp. for $250
million and accounts for this investment under the equity method.
The following information is available regarding Delta Crating
Corp.
($ in millions)
Net identifiable assets at 1/1/2017 acquisition:
Fair Value
700
Book Value
500
2017 Net Income
100
2017 Dividends declared and paid
30
2018 net income
80
2018 dividends declared and paid
20
12/31/2017 fair value (based on...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Which of the following is not a router component? Group of answer choices RAM NVRAM Flash...
- A risk-free investment of $5000 will return 3%. A risky $5000 investment has a 23% chance...
- Assume that attributes with the same name in different relations represent the same domain and that...
- JAVA: Use existing Java Stack class to solve the "Balancing Symbols" problem. The symbols are (),...
- K-NN and Perceptron theory question If we don’t care about the size of the TRAINING SET...
- Make a C program that simulates time-sharing in the operating system. Please follow the instructions provided:...
- What are some current challenges faced by food companies in reducing food waste?
ADVERTISEMENT