Rust Corporation Has Accumulated E & P of $30,000 on January

question 31

Multiple Choice

Rust Corporation has accumulated E & P of $30,000 on January 1, 2011. In 2011, Rust Corporation had an operating loss of $40,000. It distributed cash of $20,000 to Andre, its sole shareholder, on December 31, 2011. Rust Corporation's balance in its E & P account as of January 1, 2012, is:

• A) $30,000 deficit.
• B) $10,000 deficit.
• C) $0.
• D) $30,000.
• E) None of the above.

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Definitions:

Blue-money Income

Informal term possibly referring to income earned in a foreign or stronger currency, or income derived from questionable or illegal activities.

Competitive Market

A market structure characterized by many buyers and sellers, free entry and exit, and a product for which each unit is identical to every other unit.

Coconuts

Tropical fruits or nuts known for their water, milk, oil, and meat, and often used as examples in economic models.

Fish

Aquatic vertebrates that are typically covered with scales and equipped with fins for swimming.