| An S corporation generally is required to distribute the profit and loss that is reported on the K-1 based strictly on percentage ownership. The distribution is clearly based on actual amount withdrawal by the individual shareholder, however, I think what you really mean is how should the shareholder report their respective share of undistributed profits!
Since, the percentage ownership has been changing, the S corporations shareholders will report their distributive share of the profit based on the average percentage share of ownership during the year.
Thus the K-1 would reflect a distributive share of profit based on the average ownership percentage during current year, whereas, the distributions would reflect actual amounts by each shareholder. | 
