Waters Corporation Is an S Corporation with Two Equal Shareholders,Mia

question 53

Multiple Choice

Waters Corporation is an S corporation with two equal shareholders,Mia Jones and David Kerns.This year,Waters recorded the following items of income and expense: Waters distributed $25,000 to each of its shareholders during the year.Calculate the S corporation's ordinary (non-separately stated) income and indicate which items must be separately stated.

• A)Ordinary income,$126,000; long-term capital gain is separately stated.
• B)Ordinary income,$120,000; interest income and long-term capital gain are separately stated.
• C)Ordinary income,$136,000; nothing is separately stated.
• D)Ordinary income,$195,000; interest income,long-term capital gain,and salary costs are separately stated.