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Question : Case (15 marks) Ms. Shlemeel was the sole proprietor of a business that retailed specialty coffees. The business has a December 31 year-end.
Question : Case (15 marks) Ms. Shlemeel was the sole proprietor of a business that retailed specialty coffees. The business has a December 31 year-end. With the advice of her lawyer, Mr. Shlemozzel, she proposes to transfer the assets of the business on January 2, 2021 to a newly incorporated company called Shlemeel Coffees Unlimited Ltd., the common shares of which are owned by her husband. This corporation has a December 31 year[1]end. Ms. Shlemeel has provided you with the following balance sheet and additional information concerning her proprietorship. SHLEMEEL COFFEES BALANCE SHEET December 31, 2020 Current Assets Cash ........ ..$ 15,000 Accounts receivable . ..$35,000 Less: Reserve for doubtful debts .....................13,000 .................22,000 Inventory (not real estate), at cost (FMV$40,000) ............... Shares in Koffee Kart Ltd., at cost (FMV: $32,000)......................... 45,000 Prepaid rent .... ..........2,000 ...$ 121,000 Fixed assets Land, at cost (FMV: $210,000) .. ..............60,000 Building, at cost (FMV: $180,000) .. .....*.........$160,000 Less: accumulated amortization ............. ...... 95,000 ......... ..... 65,000
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