Bjorn Owns a 60% Interest in an S Corporation That

question 112

Multiple Choice

Bjorn owns a 60% interest in an S corporation that earned $150,000 in 2011. He also owns 60% of the stock in a C corporation that earned $150,000 during the year. The S corporation distributed $30,000 to Bjorn and the C corporation paid dividends of $30,000 to Bjorn. How much income must Bjorn report from these businesses?

• A) $0 income from the S corporation and $30,000 income from the C corporation.
• B) $90,000 income from the S corporation and $30,000 income from the C corporation.
• C) $90,000 income from the S corporation and $0 income from the C corporation.
• D) $30,000 income from the S corporation and $30,000 of dividend income from the C corporation.
• E) None of the above.

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Definitions:

Debit Column

The Debit Column is the left-hand side of an account record in double-entry bookkeeping, used to record increases in asset, expense, and loss accounts, and decreases in liability, equity, and revenue accounts.

General Journal

A primary accounting record used to document all financial transactions in chronological order.

Services Provided

Activities performed by a company or individual for the benefit or use of another party, typically in exchange for compensation.

Debit

An entry on the left side of an account ledger, indicating an increase in assets or expenses, or a decrease in liabilities, equity, or revenue.