Exercise 19-22 (Algorithmic) (LO. 3) On January 1 of the current year, Rhondell
ID: 2531594 • Letter: E
Question
Exercise 19-22 (Algorithmic) (LO. 3) On January 1 of the current year, Rhondell Corporation has accumulated E & P of $68,000. Current E & P for the year is $204,000, 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 during the year: A total of $108,800 ($54,400 to Elizabeth and $54,400 to Jonathan) on April 30 and a total of $190,400 ($95,200 to Jonathan and $95,200 Marshall) on December 31. Determine the allocation of the distributions by completing the table below. Assume 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. From Current From Accumulated Treated as E & P E & P Return of Capital April 30 distribution of $108,800 December 31 distribution of $190,400Explanation / Answer
Total distribution : 108800 +190400 = 299200
**current E & P (april 30 distribution ) = current earning * april distribution /total distribution
= 204000* 108800/299200
= 74182
Accumulated E& p= 108800-74182=34618
From current E & P From accumulated E & P Treated as return on capital April 30 distribution 74182 34618 0 December 31 distribution 204000-74182= 129818 68000-34618= 33382 190400-129818-33382= 27200Related Questions
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