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 $10,390. Marcus is Johnstone's sole shareholder, and he has a stock basis of $41,500 at the end of year 1. sntareyation Johnstone Corporation Income Statement December 31, Year 2 Year 2 (S Corporation) S 156,000 (36,500) (61,500) (52,000) (5,500) 4,150) 11,010 Sales revenue Cost of goods sold Salary to owners Employee wages Depreciation expense Miscellaneous expenses Interest income Overall net income $ 7,360 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 $6,300 to Marcus in year 2 Accumulated adjustments account Dividend income b. Johnstone distributed $10,300 to Marcus in year 2 Accumulated adjustments account Dividend income c. Johnstone distributed $16,300 to Marcus in year 2. Accumulated adjustments account d. Johnstone distributed $26,300 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 $10,390. Marcus is Johnstone's sole shareholder, and he has a stock basis of $41,500 at the end of year 1. sntareyation Johnstone Corporation Income Statement December 31, Year 2 Year 2 (S Corporation) S 156,000 (36,500) (61,500) (52,000) (5,500) 4,150) 11,010 Sales revenue Cost of goods sold Salary to owners Employee wages Depreciation expense Miscellaneous expenses Interest income Overall net income $ 7,360 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 $6,300 to Marcus in year 2 Accumulated adjustments account Dividend income b. Johnstone distributed $10,300 to Marcus in year 2 Accumulated adjustments account Dividend income c. Johnstone distributed $16,300 to Marcus in year 2. Accumulated adjustments account d. Johnstone distributed $26,300 to Marcus in year 2. Accumulated adjustments account Dividend income
