When forming a company, the options are sole prop

When forming a company, the options are sole prop

When forming a company, the options are sole proprietor, partnership, and corporation. Most choose corporation. Why is the corporate form seen to be best? What rights do the stockholders have? When raising capital sometimes the decision is to sell stock. What are the pros and cons of selling stock? Is it better to sell common or preferred stock? Why? Please attempt this exercise on cash flows. Paul E12-20A The income statement and additional data of Bolton Travel Products, Inc., follow: Bolton Travel Products, Inc. Income Statement Year Ended December 31, 2012 Revenues: Service revenue $237,000 Dividend revenue 8,700 $245,700 Expenses: Cost of goods sold 100,000 Salary expense 59,000 Depreciation expense 28,000 Advertising expense 2,900 Interest expense 2,100 Income tax expense 14,000 206,000 Net income $39,700 Additional data: a.Acquisition of plant assets was $130,000. Of this amount, $75,000 was paid in cash and $55,000 by signing a note payable. b.Proceeds from sale of land totaled $25,000. c. Proceeds from issuance of common stock totaled $50,000. d.Payment of long-term note payable was $16,000. e. Payment of dividends was $11,000. f. From the balance sheets: 12/31/2012 12/31/2011 Current assets: Cash $125,000 $50,800 Accounts receivable 41,000 57,000 Inventory 94,000 73,000 Prepaid expenses 9,200 8,700 Current liabilities: Accounts payable $32,000 $18,000 Accrued liabilities 82,000 57,000 ?? Prepare the operating section of Boltons statement of cash flows for the year ended December 31, 2012, using the indirect method.


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