Alaska Inc. is an accrual-basis C corporation that was incorporated on January 1, Year 1. At the end of Year 2, the corporation is considering converting to an S corporation. Alaska is required to determine its accumulated earnings and profits prior to conversion. The company has already calculated book net income, taxable income, and prior-year accumulated earnings and profits, and is now attempting to calculate the company's current earnings and profits.
Alaska Inc. is an accrual-basis C corporation that was incorporated on January 1, Year 1. At the end of Year 2, the corporation is considering converting to an S corporation. Alaska is required to determine its accumulated earnings and profits prior to conversion. The company has already calculated book net income, taxable income, and prior-year accumulated earnings and profits, and is now attempting to calculate the company's current earnings and profits.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![Alaska Inc. is an accrual-basis C corporation that was incorporated on January 1, Year 1. At the end of Year 2, the corporation is
considering converting to an S corporation. Alaska is required to determine its accumulated earnings and profits prior to conversion.
The company has already calculated book net income, taxable income, and prior-year accumulated earnings and profits, and is now
attempting to calculate the company's current earnings and profits.
In Year 4, Alaska is still a C corporation. Accumulated earnings and profits at the end of Year 3 were $61,000. Current earnings and
profits for Year 4 are $24,000. During Year 4, Alaska made two distributions on the dates indicated in column A of the table below.
Allocate the distributions indicated in column B among columns C, D, and E. Round all answers to the nearest dollar.
1
2
3
4
A
Distribution
Dates
3/31/Yr 4
9/30/Yr 4
Totals
B
Distribution
Amounts
$58,000
$33,000
$91,000
с
Current E&P
123
123
$0
D
Accumulated
E&P
at 12/31/Yr 3
123
123
$0
E
Excess
Distribution
123
123
$0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4abdd05c-6280-48f1-84fd-702fee1e9db7%2Ff3361834-2493-450f-ab1a-3fe2ef2588e9%2F4hww08j_processed.png&w=3840&q=75)
Transcribed Image Text:Alaska Inc. is an accrual-basis C corporation that was incorporated on January 1, Year 1. At the end of Year 2, the corporation is
considering converting to an S corporation. Alaska is required to determine its accumulated earnings and profits prior to conversion.
The company has already calculated book net income, taxable income, and prior-year accumulated earnings and profits, and is now
attempting to calculate the company's current earnings and profits.
In Year 4, Alaska is still a C corporation. Accumulated earnings and profits at the end of Year 3 were $61,000. Current earnings and
profits for Year 4 are $24,000. During Year 4, Alaska made two distributions on the dates indicated in column A of the table below.
Allocate the distributions indicated in column B among columns C, D, and E. Round all answers to the nearest dollar.
1
2
3
4
A
Distribution
Dates
3/31/Yr 4
9/30/Yr 4
Totals
B
Distribution
Amounts
$58,000
$33,000
$91,000
с
Current E&P
123
123
$0
D
Accumulated
E&P
at 12/31/Yr 3
123
123
$0
E
Excess
Distribution
123
123
$0
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