PROBLEM C.8 Comparison of Proprietorship with Corporation LOC-1, LOC-2, LOC-4 LOC-6, LOC-7 , LOC-8 LOC-5 & X Co. is a retail store owned solely by Joe Saunder. During the month of November, the equity accounts were affected by the following events Nov. 9 Nov. 15 Nov. 30 Nov. 30 Saunder invested an additional S15,000 in the business Saunder withdrew $1,500 for his salary for the first two weeks of the month Saunder withdrew $1,500 for his salary for the second two weeks of the month S & X distributed $1,000 of earnings to Saunder Instructions Page C-25 a. Assuming that the business is organized as a sole proprietorship 1. Prepare the journal entries to record these events in the accounts of S & X. 2. Prepare the closing entries for the month of November. Assume that after closing all of the revenue and expense accounts the Income Summary account has a credit balance of $5,000 Hint: Record the investment in a separate capital account and the withdrawals (salary) in a separate drawing account. Close the drawing account into the capital account as part of the closing entries b. Assuming that the business is organized as a corporation 1. Prepare the journal entries to record these events in the accounts of S& X. Assume that the distribution of earnings on November 30 was payment of a dividend that was declared on November 20 2. Prepare the closing entries for the month of November. Assume that after closing all of the revenue credit and expense accounts (except Income Tax Expense) the Income Summary account has a credit balance of $2,000. Before preparing the closing entries, prepare the entries to accrue income tax expense for the month and to close the Income Tax Expense account to the Income Summary account. Assume that the corporate income tax rate is 30 percent. c. Explain the causes of the differences in net income between S & X as a sole proprietorship and S & X as a corporation. d. Describe the effects of the business operations on Saunder's individual income tax return, assuming that the business is organized as (1) a sole proprietorship and (2) a corporation