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

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online