Greg Corporation, an Accrual Method Taxpayer, Had Accumulated Earnings and Profits

question 128

Multiple Choice

Greg Corporation, an accrual method taxpayer, had accumulated earnings and profits of $300,000 as of December 31, last year. For its current tax year, Greg's books and records reflect the following: Based on the above, what is the amount of Greg Corporation's current earnings and profits for this year?

• A)$120,500
• B)$122,000
• C)$124,500
• D)$129,500

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Definitions:

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered but not yet paid for.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Bank Notes

Paper money issued by a central bank, constituting a common form of legal tender in many economies around the world.

Operating Activities

Activities that constitute the primary or main activities of a company, including production, sales, and delivery of goods and services.