Beginning in 2010,the AAA of Amit,Inc. ,an S corporation,has a balance of $725,000.During the year,the following items occur. Amit's ending AAA balance is:

Question

Beginning in 2010,the AAA of Amit,Inc. ,an S corporation,has a balance of $725,000.During the year,the following items occur.  Amit's ending AAA balance is:

Quizplus · Accepted Answer

We need to calculate the ending balance of AAA. 
Beginning balance = $725,000 
Additions: 
- Net income = $400,000 
- Tax-exempt income = $40,000 
- Contributions by shareholders = $30,000 
- Taxable distributions = $10,000 
- Non-taxable distributions = $4,000 
Subtractions: 
- Losses = $14,000 
Ending balance = Beginning balance + Additions - Subtractions 
Ending balance = $725,000 + $400,000 + $40,000 + $30,000 - $10,000 - $4,000 - $14,000 
Ending balance = $1,157,000 
The correct choice is B, because it is the closest option to the calculated ending balance.