Keshia Owns 200 Shares in Parakeet Corporation

question 75

Multiple Choice

Keshia owns 200 shares in Parakeet Corporation. Keshia has a 30% beneficiary interest in her deceased grandmother's estate. The estate owns 400 shares in Parakeet Corporation. None of the other beneficiaries of the estate own stock in Parakeet. In applying the § 318 attribution rules:

• A) The estate owns 400 shares.
• B) Keshia owns 320 shares.
• C) Keshia owns 600 shares.
• D) The estate owns 460 shares.
• E) None of the above.

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Definitions:

Doubtful Accounts

Accounts receivable that a company believes might not be collected due to credit risk.

Allowance Method

An accounting technique used to estimate and anticipate uncollectible accounts receivable and bad debts.

Reinstated Account

An account previously closed or inactivated that has been restored to active status.

Uncollectible Receivables

Debts that are deemed unrecoverable by a company after exhaustive attempts to collect them, often written off as an expense.