At the beginning of the year, the AAA of Rose, Inc. shows a balance of $682,000. During the year, the following items occur. Compute the end-of-year AAA balance. $$\begin{array} { l c }
\text { Operating income } & \$ 452,000 \
\text { Interest income } & 6,550 \
\text { Dividend income } & 14,050 \
\text { Municipal bond interest income } & 12,000 \
\text { Short-term capital loss from sale of building } & 7,400 \
\text { Section } 179 \text { expense } & 6,500 \
\text { Charitable contributions } & 19,000 \
\text { Cash distributions } & 57,000 \
\text { Depreciation recapture } & 3,500
\end{array}$$
A) $1,064,700.
B) $1,185,150.
C) $1,191,150.
D) $1,242,150.

Question

At the beginning of the year, the AAA of Rose, Inc. shows a balance of $682,000. During the year, the following items occur. Compute the end-of-year AAA balance. $$\begin{array} { l c } 
\text { Operating income } & \$ 452,000 \
\text { Interest income } & 6,550 \
\text { Dividend income } & 14,050 \
\text { Municipal bond interest income } & 12,000 \
\text { Short-term capital loss from sale of building } & 7,400 \
\text { Section } 179 \text { expense } & 6,500 \
\text { Charitable contributions } & 19,000 \
\text { Cash distributions } & 57,000 \
\text { Depreciation recapture } & 3,500
\end{array}$$
A) $1,064,700.
B) $1,185,150.
C) $1,191,150.
D) $1,242,150.

Quizplus · Accepted Answer

The correct answer is A because the end-of-year AAA balance is $1,064,700. This is calculated by adding the beginning AAA balance of $682,000 to the operating income of $452,000, interest income of $6,550, dividend income of $14,050, municipal bond interest income of $12,000, and depreciation recapture of $3,500, and then subtracting the short-term capital loss from sale of building of $7,400, Section 179 expense of $6,500, charitable contributions of $19,000, and cash distributions of $57,000.

At the Beginning of the Year, the AAA of Rose