Shawn,a Sole Proprietor,is Engaged in a Service Business and Uses

question 34

Essay

Shawn,a sole proprietor,is engaged in a service business and uses the cash basis of accounting.In the current year,Shawn incorporates his business by forming Aqua Corporation.In exchange for all of its stock,Aqua receives: assets (basis of $380,000 and fair market value of $1.8 million),trade accounts payable of $125,000,and loan due to a bank of $375,000.The proceeds from the bank loan were used by Shawn to provide operating funds for the business.Aqua Corporation assumes all of the liabilities transferred to it.

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Definitions:

Telephone Claims

Requests or reports made over the phone, typically to insurance companies, about damages or losses.

Express Emotion

The process of conveying one's feelings to others through words, actions, or expressions.

Claim Promptly

The act of quickly reporting or making a formal request, often in the context of customer service or insurance, to address an issue or to receive benefits.

Less Important

Refers to something that holds less significance or priority compared to other elements or concerns.