LO.5, 6 Cougar, Inc., is a calendar year S corporation. Cougar's Form 1120S shows nonseparately stated ordinary income of $80,000 for the year. Johnny owns 40% of the Cougar stock throughout the year. The following information is obtained from Cougar's corporate records. Tax-exempt interest income Salary paid to Johnny Charitable contributions Dividends received from a non-U.S. corporation Depreciation recapture income Short-term capital loss Refund of prior state income taxes Cost of goods sold $ 3,000 (52,000) (6,000) 5,000 (6,000) 11,000 5,000 (72,000)

Long-term capital loss Administrative expenses Long-term capital gain Selling expenses Johnny's beginning stock basis Johnny's additional stock purchases Beginning AAA Johnny's loan to corporation

a. Compute Cougar's book income or loss.

b. Compute Johnny's ending stock basis.

c. Calculate Cougar's ending AAA balance. ($ 7,000) (18,000) 14,000 (11,000) 32,000 9,000 31,000 20,000