Jake,the Sole Shareholder of Peach Corporation,a C Corporation,has the Corporation

question 16

True/False

Jake,the sole shareholder of Peach Corporation,a C corporation,has the corporation pay him $100,000.For tax purposes,Jake would prefer to have the payment treated as dividend instead of salary.

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Definitions:

Direct Write-off Method

An accounting practice where actual bad debts are written off against income at the time they are identified as irrecoverable.

Bad Debt Expense

An expense reported on the income statement, representing the estimate of uncollectible accounts receivable.

Accounts Receivable

Money owed to a company by its clients or customers for goods or services delivered but not yet paid for.

Allowance for Doubtful Accounts

A contra-asset account that represents the amount of accounts receivable that a company does not expect to collect.