Lent Corporation Converts to S Corporation Status in 2019

question 104

Multiple Choice

Lent Corporation converts to S corporation status in 2019. Lent had been using the LIFO inventory method and held a LIFO inventory value of $510,000 (FIFO value of $650,000) . How much tax must be added to the C corporation tax liability for the year before the S election in 2020?

• A) $-0-.
• B) $7,350.
• C) $29,400.
• D) $140,000.

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Definitions:

Cash Flow Information

provides details about a company's cash inflows and outflows over a period.

Direct Method

A cash flow statement presentation technique that lists specific types of cash inflow and outflow transactions directly.

Indirect Method

A method for calculating cash flows in which net income is adjusted for changes in balance sheet accounts to reflect cash transactions.

Cash Equivalent

Short-term, highly liquid investments that are easily convertible to known amounts of cash and very close to their maturity.