Problem 18-4 (Algorithmic) (LO. 2, 3)

Sea Green Enterprises reports the following assets and liabilities on its balance sheet.

	Net Book Value			Fair Market Value
Assets	$905,000			$1,357,500
Liabilities	271,500			271,500

Sea Green just lost a product liability suit with damages of $13,575,000 being awarded to the plaintiff. Although Sea Green will appeal the judgment, legal counsel indicates the judgment is highly unlikely to be overturned by the appellate court. The product liability insurance carried by Sea Green includes a payout ceiling of $8,145,000.

Assume any net assets of the company will be used to reduce the judgment.

For how much of the judgment is the entity and its owners liable if Sea Green is a sole proprietorship, a partnership, an LLC, a C corporation, and an S corporation?

If an amount is zero, enter "0".

a. If the form of the business entity is a sole proprietorship, the owner is ultimately liable for $fill in the blank 1.

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b. If the form of the business entity is a partnership, the partnership and the general partners are ultimately liable for $fill in the blank 1.

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c. If the form of the business entity is an LLC, legal liability for its debts is limited to its assets. Therefore, the members of the LLC have no \ personal liability for the $fill in the blank 3.

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d. If the form of the business entity is a C corporation, the C corporation has limited liability of . The plaintiff will share with the other creditors with respect to claims against the assets. The shareholders of the C corporation for the remaining corporate debts.

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e. If the form of the business entity is an S corporation, the S corporation and its shareholders are treated like a C corporation in part (c) .