he question says:

Fridge Corporation, an S Corporation, had accumulated earnings and profits (from its C corp years) of $120,000 at the beginning of 2011. At that time the corporation had no balance in its AAA account.

Frank and Mary respectively own 70% and 30% of the stock. They each have a basis of $40,000 in the stock at the beginning of 2011. The corporation distributed one fourth of its accumulated E&P at the end of 2011.

During 2012 the corporation earned $225,000 of ordinary income and distributed two thirds of it.

What is Frank's basis in the S corporation's stock at the end of 2012?

The table below will walk you through the solution.

	Frank	Note 1	Note 2
Beginning Basis	$40,000
2011 distribution	$21,000	1/4 of $120,000 distributed *70% for Frank's share	This distribution comes from E&P. It's taxed as dividend to Frank. It does not reduce Frank's basis.Basis remains $40,000.
2012 S corp income	$157,500	Frank recognized 70% of S corporations income when earned	Recognizing S corp income makes Frank's basis go up. Basis increases to $197,500.
2012 distribution	$105,000	2/3 of $225,000 distributed *70% for Frank's share	This distribution comes from AAA, not E&P. Distributions from AAA decrease shareholder's basis. Basis decreases to $92,500.

So this is how you solve this problem the answer is 92,500 but how did the professor get that answer I can't figure it out can you show me step by step