Reference no: EM132459247
Dicussion Problem: John Parsons (123-45-6871) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111111), a candy company located at 1005 16th Street, Cut and Shoot, TX 77303. Premium's S election was made on January 15, 2011, its date of incorporation. The following information was taken from the company's 2018 income statement. Premium's book income for the year was $704,574
Interest Income $100,000
Gross Sales Receipts 2,410,000
Beginning Inventory 9,607
Direct Labor (203,102)
Direct Materials purchased (278,143)
Direct other costs (249,356)
Ending Inventory 3,467
Salaries and wages (442,103)
Officers salaries (150,000)
Repairs (206,106)
Depreciation expenses (15,254)
Interest expenses (35,222)
Rent expenses (operating) (40,000)
Taxes (65,101)
Charitable contribution (Cash) (20,000)
Advertising expenses (20,000)
Payroll penalties (15,000)
Other deductions (59,899)
Book income $704,574
A 2018 comparative balance sheet appears below.
1-Jan 31-Dec
Cash $47,840 $ ?
Accounts Receivable 93,100 123,104
Inventories 9,607 3,467
Prepaid expenses 8,333 17,582
Building and equipment 138,203 185,348
Accumulated depreciation -84,235 (?)
Land 2,000 2,000
Total liabilities and capita 214,848 $844,422
Accounts payable 42,500 72,300
Notes Payable (Less than 1 year) 4,500 2,100
Notes payable (more than 1 year) 26,700 24,300
Capital stock 30,000 30,000
Retained earnings 111,148 ?
Total liabilities and capital 214,848 $844,422
Problem 1: Premium's accounting firm provides the following additional information.
Problem 2: Cash distributions to shareholders $100,000
Problem 3: Beginning balance, accumulated adjusted account $111,148
Problem 4: Using the preceding information, complete Form 1120s (Links to an external site.) and Schedule K-1s for John Parsons and George Smith, both of whom live at 5607 20th Street, Cut and Shoot, TX 77303.