On January 1 of the current year, Rhondell Corporation has accumulated E & P of $168,000. Current E & P for the year is $504,000, earned evenly throughout the year. Elizabeth and Jonathan are sole equal shareholders of Rhondell from January 1 to April 30. On May 1, Elizabeth sells all of her stock to Marshall, Rhondell makes two distributions to shareholders ng the year: a total of $268,800 ($134,400 to Elizabeth and $134,400 to Jonathan) on April 30 and a total of $470,400 ($235,200 to Jonathan and $235,200 to Marshall) on December 31.
On January 1 of the current year, Rhondell Corporation has accumulated E & P of $168,000. Current E & P for the year is $504,000, earned evenly throughout the year. Elizabeth and Jonathan are sole equal shareholders of Rhondell from January 1 to April 30. On May 1, Elizabeth sells all of her stock to Marshall, Rhondell makes two distributions to shareholders ng the year: a total of $268,800 ($134,400 to Elizabeth and $134,400 to Jonathan) on April 30 and a total of $470,400 ($235,200 to Jonathan and $235,200 to Marshall) on December 31.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 19-25 (Algorithmic) (LO. 3)
On January 1 of the current year, Rhondell Corporation has accumulated E & P of $168,000. Current E & P for the year is $504,000, earned
evenly throughout the year. Elizabeth and Jonathan are sole equal shareholders of Rhondell from January 1 to April 30. On May 1, Elizabeth
sells all of her stock to Marshall, Rhondell makes two distributions to shareholders og the year: a total of $268,800 ($134,400 to
Elizabeth and $134,400 to Jonathan) on April 30 and a total of $470,400 ($235,200 to Jonathan and $235,200 to Marshall) on December
31.
Determine the allocation of the distributions by completing the table below. Assume that the shareholders have sufficient basis in their
stock for any amount that is treated as return of capital.
If an amount is zero, enter "0". If required, round any division to two decimal places and use in subsequent computations.
Round final answers to the nearest dollar.
April 30 distribution of $268,800
December 31 distribution of $470,400
Foodbak
From Current From Accumulated
E&P
E&P
183,273 X
Chak M18
Treated as
Return of Capital
Check My Vik
Accumulated E&P is the total of all previous years' current E & P (since February 28, 1913) reduced by distributions made from E & Pan previous
years. It is important to distinguish between current E & P and accumulated E & P because the taxability of corporate distributions depends on
how these two accounts are allocated to each distribution made during the year.
(₁](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb9f742af-b17d-4716-8fd1-9f4a50641ecc%2F4f8b096e-f39b-4faf-8e49-6202d903af75%2F0bkmbvg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Book
Exercise 19-25 (Algorithmic) (LO. 3)
On January 1 of the current year, Rhondell Corporation has accumulated E & P of $168,000. Current E & P for the year is $504,000, earned
evenly throughout the year. Elizabeth and Jonathan are sole equal shareholders of Rhondell from January 1 to April 30. On May 1, Elizabeth
sells all of her stock to Marshall, Rhondell makes two distributions to shareholders og the year: a total of $268,800 ($134,400 to
Elizabeth and $134,400 to Jonathan) on April 30 and a total of $470,400 ($235,200 to Jonathan and $235,200 to Marshall) on December
31.
Determine the allocation of the distributions by completing the table below. Assume that the shareholders have sufficient basis in their
stock for any amount that is treated as return of capital.
If an amount is zero, enter "0". If required, round any division to two decimal places and use in subsequent computations.
Round final answers to the nearest dollar.
April 30 distribution of $268,800
December 31 distribution of $470,400
Foodbak
From Current From Accumulated
E&P
E&P
183,273 X
Chak M18
Treated as
Return of Capital
Check My Vik
Accumulated E&P is the total of all previous years' current E & P (since February 28, 1913) reduced by distributions made from E & Pan previous
years. It is important to distinguish between current E & P and accumulated E & P because the taxability of corporate distributions depends on
how these two accounts are allocated to each distribution made during the year.
(₁
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