22 days ago

Purple Corporation has accumulated E & P of $100,000 on January 1, 2019. In 2019, Purple has current E & P of $130,000 (

before any distribution). On December 31, 2019, the corporation distributes $250,000 to its sole shareholder, Cindy (an individual). Purple Corporation’s E & P as of January 1, 2020 is:_______

Business

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In a transaction that qualifies under Section 351, Buster transfers an asset with a basis of $50,000 and a fair market value of

arsen [3447]

Solution:

Clarification:

The foundation for a Section 351 transfer is obtained by calculating the fair market value of the property minus the liabilities assumed, equaling $80,000 - $75,000 = $5,000.

Since Buster owns 100% of Bronco Corporation and exchanged the asset for common stock, neither he nor the corporation must report any gain or loss. The only requirement is to recognize the new basis for the asset, which is $5,000.

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3 months ago

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The General Chemical Company uses 150,000 gallons of hydrochloric acid per month. The cost of carrying the chemical in inventory

arsen [3447]

Answer:

The reorder quantity (EOQ) calculates to 32,863 gallons.

Therefore, option (a) is the correct choice.

Explanation:

The company consumes 150,000 gallons of hydrochloric acid monthly.

Ordering expenses amount to $150 per order.

Holding cost is $0.50 per gallon annually.

Since one year has 12 months, annual demand equals 12 × 150,000 = 1,800,000 gallons.

The economic order quantity (EOQ) formula is given by:

$EOQ=\frac{2\times annual\ demand\ \times ordering\ cost}{holding\ cost}=\frac{2\times 1800000\times 150}{0.5}=32863.35=3286gallons$

This calculation confirms option (a) as the accurate answer.

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4 months ago