Waters Corporation Is an S Corporation with Two Equal Shareholders

question 46

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

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Advanced Technology

Cutting-edge or highly developed tools, equipment, and processes that offer superior performance or capabilities.

Basic Skills

Basic skills are fundamental abilities such as reading, writing, math, and communication that individuals need to function effectively in society and the workplace.

Malcolm Baldrige

Namesake of the Malcolm Baldrige National Quality Award, recognizing U.S. organizations for performance excellence.

National Quality Award

An accolade given to organizations that demonstrate outstanding quality management and operational excellence.