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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
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 $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 stribution in each following alternative scenarios? ave no blan Enter zero if applicable.) a. Johnstone distributed $7,200 to Marcus in year 2. Accumulated adjustments account Dividend income C. Johnstone distributed $17,200 to Marcus in year 2. Accumulated adjustments account Dividend income d. Johnstone distributed $27,200 to Marcus in year 2. Accumulated adjustments account Dividend income
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