Aztec Company Reports Current E&P of $200,000 in 20X3 and Accumulated

question 84

Multiple Choice

Aztec Company reports current E&P of $200,000 in 20X3 and accumulated E&P at the beginning of the year of negative $100,000. Aztec distributed $300,000 to its sole shareholder on January 1, 20X3. How much of the distribution is treated as a dividend in 20X3?

• A) $300,000.
• B) $200,000.
• C) $100,000.
• D) $0.

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Definitions:

Allowance for Doubtful Accounts

An estimation of the accounts receivable that a company does not expect to collect, serving as a contra account to accounts receivable.

Bad Debt Expense

The cost associated with accounts receivable that a company is not able to collect.

Interest

The cost of borrowing money or the compensation received by lenders, usually expressed as an annual percentage rate.

Maturity Value

The total amount payable to an investor at the end of a fixed-term investment, including the principal and any accrued interest.