Paige Is Starting Paige's Poodle Parlor and Is Considering Alternative

question 138

Essay

Paige is starting Paige's Poodle Parlor and is considering alternative organizational forms.She anticipates the business will earn $100,000 from operating before compensating her for her services and before charitable contributions.Page,who is single,has $3,000 of income from other sources and other itemized deductions of $12,000.Her compensation for services will be $50,000.Charitable contributions to be made by the business are expected to be $5,000.Other distributions (dividends)to her from the business are expected to be $14,000.
Required: Compare her current income tax assuming she operates the business as a proprietorship,an S corporation,and a C corporation.Ignore payroll and other taxes.

Determine the presentation order of activities on the Statement of Cash Flows.

Understand the reporting of cash dividends and their classification in the Statement of Cash Flows.

Understand the concept of cash flows from operating, investing, and financing activities.

Learn the indirect method for calculating net cash flow from operating activities.

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Definitions:

Innovation Group

A team focused on developing and implementing new ideas, processes, or products within an organization.

Organisational Subunit

A smaller, specialized division within an organization designed to carry out specific tasks or functions.

Creative

Pertains to the ability or quality of generating original ideas, approaches, and solutions to problems or challenges.

Debt Financing

Refers to raising funds for company operations or expansion by borrowing money.