Required information [The following information applies to the questions display

Question

Required information [The following information applies to the questions displayed below.j Winkin, Blinkin, and Nod are equal shareholders in SleepEZ, an S corporation. In the conditions listed below, how much income should each report from SleepEZ for 2017 under both the daily allocation and the specific identification allocation method? Refer to the following table for the timing of SleepEZ's income Period Income January 1 through April 17 (107 days) April 18 through December 31 (258 days) $ 128,000 406,000 January 1 through December 31, 2017 (365 days)534,000 (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) c. On April 17, 2017, Winkin and Nod each sell their shares to Blinkin Income Reported Daily Allocation Specific Identification Method $ 52.181 $ 42,667 $ 52,181 X$ 42,667x $ 429,6380$ 448,6670 Method Winkin Blinkin Nod

Explanation / Answer

c. Allocation on Daily basis method.

Total income = 534,000

Number of days before selling of shares = 107 days

Total income allocable to 107 days = 534,000 / 365 days x 107 days = $156,542.465

Share of each shareholder = $156,542.465 / 3 = $52,181

Shareholder

Daily Allocation

Winkin

52,181

Blinkin

429,638

Nod

52,181

Allocation on Specific Identification Method

Income for 107 days actual = $128,000

Share of each shareholder = $42,666.67

Shareholder

Specific Identification Allocation

Winkin

42,666.67

Blinkin

448,667

Nod

42,666.67

NOTE: Dear Student, your answer was correct you have just put the amount of Nod in Blinkin and vice-versa.

Shareholder

Daily Allocation

Winkin

52,181

Blinkin

429,638

Nod

52,181

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