Reference no: EM132464735
On February 12, 2005, Nancy Trout and Delores Lake formed Kingfisher Corporation to sell fishing tackle. Pertinent information regarding Kingfisher is summarized as follows:
- Kingfisher's business address is 1717 Main Street, Ely, MN 55731; its telephone number is (218) 555-2211;
- The employer identification number is 11-1111113, and the principal business activity code is 451110.
- Nancy owns 50% of the common stock and is president of the company, and Delores owns 50% of the common stock and is vice president of the company. No other class of stock is authorized.
- Both Nancy and Delores are full-time employees of Kingfisher. Nancy's Social Security number is 123-45-6788, and Delores's Social Security number is 123-45-6787.
- Kingfisher is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Kingfisher uses the straight-line method of deprecation for book purposes and accelerated depreciation (MACRS) for tax purposes.
- During 2018, the corporation distributed cash dividends of $80,000.
- Kingfisher's financial statements for 2018 are shown below and on the next page.
Income Statement Income
Gross sales $2,408,000
Sales returns and allowances (80,000)
Net sales $2,328,000
Cost of goods sold (920,000)
Gross profit $1,408,000
Dividends received from stock investments in less-than-20%-owned U.S. corporations12,000
Interest income: State bonds $14,000
Certificates of deposit 10,000
24,000
Total Income $1,444,000
Expenses
Salaries-officers:Nancy Trout $160,000
Delores Lake 160,000 $320,000
Salaries-clerical and sales 290,000
Taxes (state, local, and payroll) 85,000
Repairs and maintenance 56,000
Interest expense: Business loans $12,000
Loan to purchase state bonds 8,00020,000
Advertising 6,000
Rental expense 68,000
Depreciation 40,000
Charitable contributions 15,000
Employee benefit programs 24,000
Premiums on term life insurance policies on lives of Janet Morton and Kim Wong;
Pet Kingdom is the designated beneficiary 16,000
Total expenses (940,000)
Net income before taxes $504,000
Federal income tax ( 106,680)
Net income per books $397,320
- You are not provided enough detailed information to fill in Form 4562 (depreciation). If you solve this problem using Intuit ProConnect, enter the amount of deprecation on line 20 of Form 1120.
Balance Sheet Assets January 1, 2018 December 31, 2018
Cash $380,000 $337,300
Trade notes and accounts receivable 308,400 480,280
Inventories 900,000 1,012,000
State bonds 160,000 160,000
Federal income tax refund-0-1,
320 Certificates of deposit 140,000 140,000
Stock investments 300,000 300,000
Buildings and other depreciable assets 240,000 240,000
Accumulated depreciation (88,000) (128,800)
Land 20,000 20,000
Other assets 3,600 2,000
Total assets $2,363,200 $2,564,100
Liabilities and Equity January 1, 2018 December 31, 2018
Accounts payable $300,000 $233,880
Other current liabilities 80,300 40,000
Mortgages 210,000 200,000
Capital stock 500,000 500,000
Retained earnings 1,272,900 1,590,220
Total liabilities and equity $2,363,200 $2,564,100
Required:
Question 1: During 2018, Kingfisher made estimated tax payments of $27,000 each quarter to the IRS. do Form 1120 for Kingfisher for tax year 2018.
- If an amount box does not require an entry or the answer is zero, enter "0".
- Enter all amounts as positive numbers, unless otherwise instructed.
- If required, round amounts to the nearest dollar.
- Make realistic assumptions about any missing data.