Required information [The following information applies to the questions displayed below.] 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 $12,990. Marcus is Johnstone's 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) Interest 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.) a. Johnstone distributed $8,300 to Marcus in year 2. Accumulated adjustments account Dividend income c. Johnstone distributed $18,300 to Marcus in year 2. Accumulated adjustments account Dividend income d. Johnstone distributed $28,300 to Marcus in year 2. Accumulated adjustments account Dividend income Required information [The following information applies to the questions displayed below.] 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 $12,990. Marcus is Johnstone's 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) Interest 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.) a. Johnstone distributed $8,300 to Marcus in year 2. Accumulated adjustments account Dividend income c. Johnstone distributed $18,300 to Marcus in year 2. Accumulated adjustments account Dividend income d. Johnstone distributed $28,300 to Marcus in year 2. Accumulated adjustments account Dividend income
