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Unformatted text preview: 0,000 of the distribution.
Choice "c" is incorrect. The corporation had accumulated earnings and profits of $60,000 that must also
Choice "d" is incorrect. Distributions from a corporation to its shareholders are considered dividend
income to the extent the corporation has current and accumulated earnings and profits. Any additional
amounts are a return of capital and any excess beyond capital are considered capital gain. CPA-04731 Type1 M/C A-D Corr Ans: D PM#85 R 3-01 66. CPA-04731 Released 2005 Page 39
Bridge, a C corporation, had $15,000 in accumulated earnings and profits at the beginning of the current
year. During the current year, Bridge reported earnings and profits of $10,000 and paid $20,000 in cash
distributions to its shareholders in both March and July. What amount of the July distribution should be
classified as dividend income to Bridge's shareholders?
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.
- Fall '10
- The Land