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 $11,560. Marcus is Johnstone's sole shareholder, and he has a stock basis of $46,000 at the end of year 1.

Johnstone Corporation
Income Statement
December 31, Year 2
	Year 2 (S Corporation)
Sales revenue	$ 174,000
Cost of goods sold	(41,000)
Salary to owners	(66,000)
Employee wages	(56,500)
Depreciation expense	(10,000)
Miscellaneous expenses	(4,600)
Interest income	12,540
Overall net income	$ 8,440

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?

b. Johnstone distributed $11,200 to Marcus in year 2.

c. Johnstone distributed $17,200 to Marcus in year 2.

d. Johnstone distributed $27,200 to Marcus in year 2.