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 $11,820. Marcus is Johnstone's sole shareholder, and he has a stock basis of $47,000 at the end of year 1. Johnstone Corporation Income Statement December 31, Year 2 Sales revenue Cost of goods sold Salary to owners Employee wages Depreciation expense Miscellaneous expenses Interest income. Overall net income. Year 2 (S Corporation) $ 178,000 (42,000) (67,000) (57,500) (11,000) (4,700) 12,880 $ 8,680 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? Note: Leave no answer blank. Enter zero if applicable. Johnstone distributed $27,400 to Marcus in year 2. Accumulated adjustments account $ Dividend income 0

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 $11,820. Marcus is Johnstone's sole shareholder, and he has a stock basis of $47,000 at the end of year 1. Johnstone Corporation Income Statement December 31, Year 2 Sales revenue Cost of goods sold Salary to owners Employee wages Depreciation expense Miscellaneous expenses Interest income. Overall net income. Year 2 (S Corporation) $ 178,000 (42,000) (67,000) (57,500) (11,000) (4,700) 12,880 $ 8,680 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? Note: Leave no answer blank. Enter zero if applicable. Johnstone distributed $27,400 to Marcus in year 2. Accumulated adjustments account $ Dividend income 0

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Description: [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 andelected to be taxed as an S corporation beginning in year 2. Johnston

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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) $ 174,000 ( 41,000) (66,000) (56,500) (10,000) ( 4,600) 12,540 $ 8,440 Sales revenue Cost of goods sold Salary to owners Employee wages Depreciation expense Miscellaneous expenses Interest income Overall net income 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.) b. Johnstone distributed $11,200 to Marcus in year 2. Accumulated adjustments account Dividend income
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