Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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 $12,080. Marcus is Johnstone's sole shareholder, and he has a stock basis of $48,000 at the end of year 1. Johnstone Corporation Income Statement December 31, Year 2 Year 2 (S Corporation) Sales revenue $ 182,000 Cost of goods sold (43,000) Salary to owners (68,000) Employee wages (58,500) Depreciation expense (12,000) Miscellaneous expenses (4,800) Interest income 13, 220 Overall net income 8,920 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.) b. Johnstone distributed $11,600 to Marcus in year 2. Answer is not complete. $ Accumulated adjustments account Dividend income c. Johnstone distributed $17,600 to Marcus in year 2. $ Accumulated adjustments account Dividend income d. Johnstone distributed $27,600 to Marcus in year 2. Answer is not complete. $ Accumulated adjustments account Dividend income
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started