WEEK 2 CASE STUDIES - Lecture Case Study Week 2 Sole...

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Lecture Case Study – Week 2 Sole Proprietorship Vanilla has inherited $200,000 and decides to purchase a coffee shop. He gives up his job and runs it himself. In the first financial year he makes a profit of $100,000. He withdraws $50,000 from the business during the year as living expenses. 1. How much capital is there to begin the second year of operations of his business? 2. How much income tax does the business pay? Partnership Suppose Vanilla’s wife, Bean, gives up her job and joins him in partnership running the business. They agree that the $200,000 investment is a joint capital contribution and agree to split profits equally. The same amount of $50,000 is withdrawn from the business as living expenses. 3. How much capital is there to begin the second year of operations of their business? 4. How much income tax does the business pay? Company Suppose Vanilla decides to set up a company structure for the coffee shop business, with himself as the only shareholder and director. The company pays Vanilla a salary of $50,000.
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This note was uploaded on 08/29/2011 for the course BUSN 1001 taught by Professor Catherineikin during the Three '08 term at Australian National University.

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WEEK 2 CASE STUDIES - Lecture Case Study Week 2 Sole...

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