Green Corporation has accumulated E & P of $50,000 on January 1,2010.In 2010,Green has current E & P of $65,000 (before any distribution).On December 31,2010,the corporation distributes $125,000 to its sole shareholder,Maxwell (an individual).Green Corporation's E & P as of January 1,2011 is:
A)$0.
B)($10,000).
C)$50,000.
D)$65,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The correct answer is A because the distribution exceeds the current and accumulated E&P, resulting in a negative E&P balance.

Green Corporation Has Accumulated E & P of $50,000 on January