The transactions completed by franklin company during january, its first month of operations, are listed below. assume that franklin company uses the following journals: cash receipts (cr), cash payments (cp), revenue (r), and purchases (p). assume that it uses accounts receivable and accounts payable subsidiary ledgers as well as a general ledger. indicate by letters which journal would be used for each transaction and whether or not the entry requires a posting to a subsidiary ledger.

Which of the following statements is correct? large corporations are taxed more favorably than sole proprietorships. corporate stockholders are exposed to unlimited liability. due to limited liability, unlimited lives, and ease of ownership transfer, the vast majority of u.s. businesses (in terms of number of businesses) are organized as corporations. most businesses (by number and total dollar sales) are organized as partnerships or proprietorships because it is easier to set up and operate in one of these forms rather than as a corporation. however, if the business gets very large, it becomes advantageous to convert to a corporation, mainly because corporations have important tax advantages over proprietorships and partnerships. most business (measured by dollar sales) is conducted by corporations in spite of large corporations’ often less favorable tax treatment, due to legal considerations related to ownership transfers and limited liability.