Waters Corporation Is an S Corporation with Two Equal Shareholders

Waters Corporation is an S corporation with two equal shareholders, Mia Jones and David Kerns. This year, Waters recorded the following items of income and expense: $\begin{array}{llr} \text { Sales revenue} &\$500,000\\ \text {Interest income } &6,000\\ \text { Long-term capital gain } &10,000\\ \text {Cost of goods sold } &(250,000) \\ \text {Salary and wages } &(75,000) \\ \text { other operating expenses } &(55,000) \\\end{array}$
Waters distributed $25,000 to each of its shareholders during the year. Calculate the S corporation's ordinary (non-separately stated) income and indicate which items must be separately stated.

A) Ordinary income, $126,000; long-term capital gain is separately stated.
B) Ordinary income, $120,000; interest income and long-term capital gain are separately stated.
C) Ordinary income, $136,000; nothing is separately stated.
D) Ordinary income, $195,000; interest income, long-term capital gain, and salary costs are separately stated.