June Is a 20% Owner-Employee in the Woodbourne Corporation, an S

question 4

Multiple Choice

June is a 20% owner-employee in the Woodbourne Corporation, an S corporation. She is not paid a salary and her share of the corporation's income is $57,000.
I.June must pay self-employment tax at the rate of 15.3% on her share of the S corporation's income.
II.June must pay Social Security at a rate of 7.65% on her share of the S corporation income.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

ASPE

Accounting Standards for Private Enterprises; a set of accounting standards for private companies in Canada.

Mortgage Payable

A liability representing money owed on a long-term loan used to purchase property, typically secured by the property itself.

Financing Activities

Transactions related to raising capital and repaying shareholders, including issuing equity, obtaining loans, and paying dividends.

Investing Activities

Transactions that involve the purchase or sale of long-term assets and investments are considered investing activities.