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    Dividend Payment and Accumulated E and P

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    For each of the following independent situations, complete the table by computing the dividend payment and accumulated E&P at the beginning of year 2.

    Accumulated
    E&P 1/1/
    Year 1
    Cash
    Distribution
    Current
    E&P
    Dividend
    Payment Accumulated
    E&P 1/1/
    Year 2
    Situation 1 $190,000 $100,000 $150,000
    Situation 2 55,000 100,000 80,000
    Situation 3 (50,000) 100,000 133,700
    Situation 4 (18,000) 100,000 (48,000)
    Situation 5 160,000 100,000 (42,900)
    Situation 6 -0- 100,000 (72,500)

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    https://brainmass.com/business/accounting-for-corporations/dividend-payment-accumulated-115811

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    Cash distribution to the shareholder is a "dividend," but the dividend amount is limited to the distributing corporation's earnings and profits amount. However, if the total amount of accumulated E&P is not enough, the amount of cash ...

    Solution Summary

    This solution is comprised of a detailed explanation to complete the table by computing the dividend payment and accumulated E&P at the beginning of year 2.

    $2.19