Question

A weakness of a partnership form of business organization is ___(Choose all that are correct). the difficulty in liquidating or transferring ownership the difficulty in maintaining owners' control that each partner is legally liable for all debts of the partnership the double taxation of income Question 4 4 pts The Johnson Corporation has earnings before interest and taxes of $50,000. The company has a flat corporate tax rate of 35%. If the company pays $12,000 in preferred stock dividends, what is earnings available to common shareholders? O $20,500 $30,020 $27,500 $24,700

Answer 1

Question 4

EBIT = $ 50,000

Tax Rate = 35%

Net Income = EBIT - 35% * EBIT

Net Income = 50,000 - 35% * 50,000

Net Income = 50,000 - 17,500

Net Income = $ 32,500

Net Income available for Common Shareholders = Net Income - Amount paid as Preferred Dividends

Net Income available for Common Shareholders = 32,500 - 12,000

Net Income available for Common Shareholders = $ 20,500

Option A is the Correct Answer.

Question 3

Option B and C are the Correct Answers.

The difficulty in maintaining owners control.

Each Partner is legally liable for all the debts of the partnership.

This is one of the biggest disadvantage associated with the partnership form of Business . The partners are liable for their share as well for other partners in case of the inability of other partners to pay their portion of debts. In simple easy words the partner is also liable for the debts and acts which is not done by him in the course of business creating a joint and individual personal liability.

Another problem is the control of ownership. As there are many partners the level of control is also less as all the partners are confirmed for decision making process. It creates a negativity in the mind of partners . The lack of control over business is also a disadvantage of partnership form of business.