A 89. 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. 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 $46,000 at the end of year 1.Johnstone CorporationIncome StatementDecember 31, Year 2Sales revenueCost of goods soldSalary to ownersEmployee wagesDepreciation expenseMiscellaneous expensesInterest incomeOverall net incomeYear 2 (S Corporation)$ 174,000(41,000)(66,000)(56,500)(10,000)(4,600)12,540$ 8,440What is Johnstone's accumulated adjustments account at the end of year 2, and what amount of dividend income doesMarcus recognize on the year 2 distribution in each of the following alternative scenarios?b. Johnstone distributed $11,200 to Marcus in year 2.c. Johnstone distributed $17,200 to Marcus in year 2.d. Johnstone distributed $27,200 to Marcus in year 2.

The cumulative amount of the S corporation's taxable revenue and separately declared items, less any…

What is Johnstone's accumulated adjustments account at the end of year 2, and what amount of dividend income do Marcus recognize on the year 2 distribution in each of the following alternative scenarios? b. Johnstone distributed $11,200 to Marcus in year 2. c. Johnstone distributed $17,200 to Marcus in year 2. d. Johnstone distributed $27,200 to Marcus in year 2.

What is Johnstone's accumulated adjustments account at the end of year 2, and what amount of dividend income do Marcus recognize on the year 2 distribution in each of the following alternative scenarios? b. Johnstone distributed $11,200 to Marcus in year 2. c. Johnstone distributed $17,200 to Marcus in year 2. d. Johnstone distributed $27,200 to Marcus in year 2.

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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