Cpa 01807 are r03 5 a d 36000 8500 4000 corr ans

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Unformatted text preview: income CPA-01807 Type1 M/C 3. CPA-01807 ARE R03 #5 A-D $36,000 $8,500 (4,000) Corr Ans: B $4,500 1,500 (3,500) PM#3 (2,000) 2,500 $38,500 R 3-01 Page 34 At the beginning of the year, Westwind, a C corporation, had a deficit of $45,000 in accumulated earnings and profits. For the current year, Westwind reported earnings and profits of $15,000. Westwind 2 © 2009 DeVry/Becker Educational Development Corp. All rights reserved. Maxixishere Pdf Collection Becker CPA Review, PassMaster Questions Lecture: Regulation 3 distributed $12,000 during the year. What was the amount of Westwind's accumulated earnings and profits at year-end? a. b. c. d. $30,000 $42,000 $45,000 $57,000 CPA-01807 Explanation Choice "b" is correct. Accumulated earnings and profits include all prior and current year earnings and profits at year-end. The key here is recognizing that the beginning accumulated earnings and profits is a deficit. Thus the calculation would be as follows: Beginning deficit in Accumulated E&P Plus: Current year E&P Less: Amounts distributed End of year Accumulated E&P ($45,000) 15,000 ( 12,000) ($42,000) Note: The examiners did not ask whether or not the accumulated earnings and profits at year-end was a deficit, rather th...
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