Provide short answers on the following:Jimmy Joe Thudpucker and his sister, Linda-Lou Thudpucker are starting a carpet and flooringbusiness here in Winchester. Jimmy will do the installations work and Linda-Lou is great withcustomer service. Jimmy-Joe Finds out that you are taking BA-303 and wants you to explain theadvantages and disadvantages of using either a(1) Written Partnership Agreement;(2) LLC;(3) Limited Partnership, or(4) Traditional Corporation.Explain the advantages and disadvantages of these types of business models. Don't forget torecommend which specific type you think is the best choice for the Thudpuckers' new business.

1. Written Partnership Agreement:Advantages:Flexibility: Partnerships allow for a bendy management…

Answered: Provide short answers on the following:…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter19: Accounting For Partnerships

Section: Chapter Questions

Problem 1MYW

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A client of yours is seeking your help in understanding a number of issues involving various aspects of a partnership. The business under consideration is a manufacturer of custom fabricated steel building components such as fire escapes, stairways and landings, and racking systems. Provide a response to each of the questions your client has.1. One of the potential partners wants to allocate partnership profits by including interest on invested capital and bonuses, as a percentage of net income after bonuses. Why would interest on capital be important given this type of business, and what is the best way to measure capital?2. Determining a bonus on net income after the bonus seems counterintuitive. Why not just base the bonus on net income?3. Are drawings and capital the same thing? Why is it necessary to make a distinction?4. If a partner is legally considered an employee of the partnership and receives a regular paycheck and an annual W-2 statement, is this the same thing as the…
Use the information below to answer the next five questions: Ahne, a sole proprietor owns a daycare center named Azsh™. Her business operation was rapidly expanding but her capacity to support the operation needs and to manage the business was limited. She decided to ask her friend Johnny, to help him in the business. They agreed to be partners in the business, and consequently, the business needs to be converted into a partnership. The data of Azsh™ before the partnership formation were as follows: Cash 80,000.00 Accounts Receivable 50,000.00 Supplies 15,000.00 Land 100,000.00 Building 250,000.00 Accumulated Deprecation (50,000.00) 200,000.00 Furniture and Fixtures 100,000.00 Accumulated Depreciation (20,000.00) 80,000.00 Total Assets 525,000.00 Accounts Payable 25,000.00 Mortgage Payable 120,000.00 Ahne, Capital 380,000.00 Total…
2) Jim and Carol both work in the real estate market. One day, a great investment property came on the market, and they decided to pool their money to buy and renovate it. They plan to spend six weeks on the renovation, and they hope to make a nice profit when they turn around and sell it. Jim and Carol's partnership is an example of A) a limited partnership. B) a cooperative. C) an S corporation. D) a limited liability company. E) a joint venture.
Ethics in Action Edward Seymour is a financial consultant to cornish Inc, Areal estate syndicate, Cornish finances and develops commercial real estate(office buildings) projects. The completed projects are then sold as limited partnership interests to individual investors. The syndicate makes a profit on the sale of these partnership interests. Edward provides financial information for prospective investors in a document called the offering "prospectus" This document discusses the financial and legal details of the limited partnership investment. one of the company's current projects, called JEDI 2, Has the partnership borrowing money from a local bank to build a commercial office building. The inerest rate on the loan is 6.5% for the first four years. After four years. The interest rate jumps to 15% for the remaining 20years of the loan The intrest expense is one of the major costs of this project and significantly affects the number of reenters needed for the project to break even,…
Chris Gray, Bryson Alef, and Nick Pirollo are founding partners of their company, Scholly. Assume that Chris, Bryson, and Nick decide to expand their business with the help of general partners. Required 1. What details should Chris, Bryson, Nick, and their future partners specify in the general partnership agreements? 2. What advantages should Chris, Bryson, Nick, and their future partners be aware of with respect to organizing as a general partnership? 3. What disadvantages should Chris, Bryson, Nick, and their future partners be aware of with respect to organizing as a general partnership?
Sara is planning to open a construction company in the UK. She understands that a limited company needs more formalities in terms of formation and operation, compared to other forms of business organisations, however, it will be more beneficial to her. Sara is already familiar with the reporting and recording requirements of a partnership since she is a partner at SAZ Hardware in the UK. She asked your help on the following: a. Describe how a company is formed, owned and managed.…
Pete the Cat and his friend Grumpy Toad are starting a band. As they think it will be quite successful, it would be smart to officially set up a partnership agreement. Pete will be able to contribute $1,000 as well as his guitar which has a fair market value of $500. Grumpy Toad will be able to contribute his bass with a fair value of $800. Pete talks to his brother Bob about the agreement and Bob puts forward two suggestions. Option 1 Pete gets a salary of $10,000 and Grumpy gets a salary of $12,000 Pete earns 20% interest and Grumpy earns 15% Remaining income is split 50 / 50 Option 2 Both partners get a salary of $15,000 Both partners earn 15% interest Remaining income is split 75 / 25 (Pete / Grumpy) Pete thinks that in year 1 the band will make $5,000 but in future years this will be $35,000 and then $60,000. Pete has come to you - his mom / dad for advice. Which option is better for Pete? Which option is better for the band? Pete also wants to know a little bit…
Sam wants to help his brother, Lou, start a new business. Lou isan auto mechanic but has little business sense, so he needs Sam to help him make business decisions. Should this partnership be arranged as a general partnership or a limited partnership? Why? Should they consider any other form for structuring their business? In your post, only discuss the partnership entity options, do not discuss other business types such as S-corporations.
Moustapha and Ava want to form a business to buy and sell small appliances. They will both actively work in the business. They are concerned about personal liability. They estimate the company will not be profitable for five years and they want to be able to deduct any losses. Which form of entity should they use to accomplish their objectives? O limited partnership O any of the listed entities would accomplish their objectives O limited liability company O general partnership
QUESTION 2 (a) Jaymee decided to operate a small shop selling local delicacies. His brother Jamesis interested to partner with him. Advise them on the advantages anddisadvantages ofi) sole proprietorshipii) partnershipThen justify whether Jaymee should start as a sole proprietor or partner withJames. Answer should be written with proper examples and elaborations Thank you.
Evelyn, Francis and George, run a business buying and selling wigs. They have been advised by their lawyer to form a private limited company to run the business. They have contacted you for a second opinion, particularly in respect of: a. The extent to which their liability will be limited; b. Wether they will be able to exercise the same control over the private company as they did with the partnership. c. The extend to which they will have the same right to be involved in the management of the private limited company; and d. The public disclosure to which the business would be subjected to as a private company
Your client has been asked to invest in a partnership which will develop a piece of real estate for commercial use. It is estimated that the development will occur over three years after which time the partnership will be liquidated. After reviewing selected historical and prospective financial information, your client has asked you to provide answers to the following questions:1. I thought goodwill could only be recorded by a company if it purchased another company. Why does the historical balance sheet show goodwill as an asset even though the partnership has not acquired any other companies?2. Apparently, a contribution of capital to a partnership can be recorded by either the bonus or goodwill method. For purposes of securing bank financing and reporting an attractive return on investment, which method would be most appropriate?3. If the partnership secured a bank loan, upon liquidation of the partnership which would be paid back first, the bank loan or my invested capital…

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