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. Johnstones earnings and profits at the end of year 1 were $12,990. Marcus is Johnstones sole shareholder, and he has a stock basis of $51,500 at the end of year

1. Johnstone Corporation Income Statement December 31, Year 2 Year 2 (S Corporation)

Sales revenue $ 196,000

Cost of goods sold (46,500 ) Salary to owners (71,500 )

Employee wages (62,000 )

Depreciation expense (15,500 )

Miscellaneous expenses (5,150 )

nterest income 14,410

Overall net income $ 9,760

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? (Leave no answer blank. Enter zero if applicable.)

d. Johnstone distributed $28,300 to Marcus in year 2.