Starling Corporation has accumulated E & P of $60,000 on January 1, 2014. In 2014, Starling Corporation had an operating loss of $80,000. It distributed cash of $40,000 to Zoe, its sole shareholder, on December 31, 2014. Starling Corporation's balance in its E & P account as of January 1, 2015, is:

Question

Quizplus · Accepted Answer

The accumulated E&P of $60,000 is reduced by the operating loss of $80,000, resulting in a deficit of $20,000. The distribution does not affect the E&P balance as it is already in a deficit.

Starling Corporation Has Accumulated E & P of $60,000 on January