1. Problem 2-5
Fred Gowen opened Gowen Retail Sales as a sole proprietorship and recorded the following
transactions during his first month in business:
1. Purchased $50,000 of fixed assets, putting 20% down and borrowing the remainder.
2. Sold 1,000 unit
1. Problem 1-2
Harvey Redmond is planning a new business that he expects will grow into a
large company within a few years. Harvey's lawyer has advised him that
large companies are usually C-type corporations because of stock market
considerations, so he'
1. Problem 1-3
Jill Meier is the sole owner of Meier Corp., which provides her
only source of income. Jill has always paid herself entirely by
drawing dividends from her corporation. A friend suggested
that as long as she is earning about what she would h
Sussman Industries purchased a drilling machine for
$70,000 and paid cash. Sussman expects to use the
machine for 20 years, after which it will have no
value. It will be depreciated straight-line over the 20
years. Assume a
All of the following are characteristics of I: Corporations except:
0 ease of raising additional capital for expansion.
\®\avoidance of double taxation.
0 limited liability for the stockholders.
(3' unlimited life.
The principal legal difference between a
What is a 'Capital Structure'
The capital structure is how a firm finances its overall operations and growth by using different sources
of funds. Debt comes in the form of bond issues or long-term notes payable, while equity is classified as