At the beginning of the year, the Accumulated Adjustments Account (AAA) of Gopher Corporation, an S corporation,
Question:
At the beginning of the year, the Accumulated Adjustments Account (AAA) of Gopher Corporation, an S corporation, has a balance of $925,000. Gopher’s other adjustments account (OAA) has balance of $35,000. Gopher has two 50% shareholders. During the year, the following items occur:
Operating income $475,000
Dividend income 8,200
Municipal bond interest income 1,400
Long-term capital gain from sale of land 32,800
Short-term capital loss from sale of 3M Corp stock (5,800)
Nondeductible sales tax penalty paid to State of MN (6,500)
Charitable contributions (cash) (22,000)
Interest expenses on loan used to purchase municipal bond (1,100)
Cash distributions to shareholders 180,000
Compute Gopher’s ending AAA and OAA balances for the year. Show computations
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen