Reducto Co

question 5

Multiple Choice

Reducto Co.pays a weekly payroll of $95,000 that includes federal taxes withheld of $12,700,FICA taxes withheld of $7,270,and retirement withholdings of $6,000.What is the effect of assets and liabilities from this transaction?

• A)Assets decrease $85,000 and liabilities decrease $25,970.
• B)Assets decrease $85,000 and liabilities increase $25,970.
• C)Assets decrease $69,030 and liabilities decrease $25,970.
• D)Assets decrease $69,030 and liabilities increase $25,970.

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Definitions:

Corporation by Estoppel

A legal doctrine that prevents a party from denying the corporation's existence if they have dealt with it as if it were a legal corporation.

Subchapter S Corporation

A form of corporation in the United States that is taxed under Subchapter S of the Internal Revenue Code, allowing profits to be taxed at the shareholder level rather than at the corporate level.

Domestic Corporation

A corporation that is incorporated and operates in its country of origin, adhering to the laws and regulations of that country.

One Class of Stock

A corporate structure where all shares offer the same rights, privileges, and limitations to shareholders, without tiered levels of stock.