Assume the following year 2 income statement for Johnstone Corporation, which was a C corporation in year 1 and elected to be taxed as an S corporation beginning in year 2. Johnstone's earnings and profits at the end of year 1 were $12,470. Marcus is Johnstone's sole shareholder, and he has a stock basis of $49,500 at the end of year 1.

Johnstone Corporation

Income Statement

December 31, Year 2

Year 2 (S Corporation)

Sales revenue $ 188,000

Cost of goods sold (44,500)

Salary to owners (69,500)

Employee wages (60,000)

Depreciation expense (13,500)

Miscellaneous expenses (4,950)

Interest income 13,730

Overall net income $ 9,280

What is Johnstone's accumulated adjustments account at the end of year 2, and what amount of dividend income does Marcus recognize on the year 2 distribution in each of the following alternative scenarios?

Note: Leave no answer blank. Enter zero if applicable.

b. Johnstone distributed $11,900 to Marcus in year 2.