A corporation had the following assets and liabilities at the beginning and end of this year. Liabilities $32,581 48,398 Assets Beginning of the year End of the year $ 76,000 119,500 a. Owner made no investments in the business, and no dividends were paid during the year. b. Owner made no investments in the business, but dividends were $600 cash per month. c. No dividends were paid during the year, but the owner did invest an additional $45,000 cash in exchange for common stock. d. Dividends were $600 cash per month, and the owner invested an additional $35,000 cash in exchange for common stock. Determine net income or net loss for the business during the year for each of the above separate cases: (Decreases in equity should be indicated with a minus sign.) b. C. d. Beginning of the year-Equity $ 43,419 $ 43,419 $ 43,419 $ 43,419 Owner investments 45,000 35,000 www m Dividend (7,200) (7,200) Net income (loss) 27,683 End of the year-Equity $ 71,102 $ 71,102 $ 71,102 $ 71,102

A corporation had the following assets and liabilities at the beginning and end of this year. Liabilities $32,581 48,398 Assets Beginning of the year End of the year $ 76,000 119,500 a. Owner made no investments in the business, and no dividends were paid during the year. b. Owner made no investments in the business, but dividends were $600 cash per month. c. No dividends were paid during the year, but the owner did invest an additional $45,000 cash in exchange for common stock. d. Dividends were $600 cash per month, and the owner invested an additional $35,000 cash in exchange for common stock. Determine net income or net loss for the business during the year for each of the above separate cases: (Decreases in equity should be indicated with a minus sign.) b. C. d. Beginning of the year-Equity $ 43,419 $ 43,419 $ 43,419 $ 43,419 Owner investments 45,000 35,000 www m Dividend (7,200) (7,200) Net income (loss) 27,683 End of the year-Equity $ 71,102 $ 71,102 $ 71,102 $ 71,102

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 18P

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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 Sales r evenue Cost of goods sold Salary to owners Employee wages Depreciation expense Miscellaneous expenses Interest income Overall net income $ 8,440 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.) a. Johnstone distributed $7,200 to Marcus in year 2. Accumulated adjustments account Dividend income
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.) d. Johnstone distributed $27,200 to Marcus in year 2. Accumulated adjustments account Dividend income
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