Flintstone company is owned equally by fred stone and his sister wilma, each of whom hold 2,500 shares in the company. wilma wants to reduce her ownership in the company, and it was decided that the company will redeem 560 of her shares for $26,000 per share on december 31 of this year. wilma’s income tax basis in each share is $8,750. flintstone has current e& p of $10,420,000 and accumulated e& p of $50,690,000.what is the amount and character recognized by wilma as results of the stock redemption, assuming only the "sustainabiity disproportionate with respect to shareholder" test is applied?

For each separate case below, follow the 3-step process for adjusting the prepaid asset account at december 31. step 1: determine what the current account balance equals. step 2: determine what the current account balance should equal. step 3: record the december 31 adjusting entry to get from step 1 to step 2. assume no other adjusting entries are made during the year. a. prepaid insurance. the prepaid insurance account has a $4,700 debit balance to start the year. a re- view of insurance policies and payments shows that $900 of unexpired insurance remains at year-end. b. prepaid insurance. the prepaid insurance account has a $5,890 debit balance at the start of the year. a review of insurance policies and payments shows $1,040 of insurance has expired by year-end. c.prepaidrent.onseptember1ofthecurrentyear,thecompanyprepaid$24,000 for 2 years of rentfor facilities being occupied that day. the company debited prepaid rent and credited cash for $24,000.

3. describe the purpose of the sec. (1-4 sentences. 2.0 points)

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