Reference no: EM13539510
On February 12, 2002, Nancy Trout and Delores Lake formed Kingfisher Corporation to sellfishing 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; and its e-mail address is [email protected].
- The employer identification number is 11-1111111, 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 123-45-6789, and Delores's Social Security number is 987-65-4321.
- 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 2012, the corporation distributed cash dividends of $64,000.
Income Statement
Income
Gross sales $1,884,000
Sales returns and allowances (64,000)
Net sales $1,820,000
Cost of goods sold (736,000)
Gross profit $1,084,000
Dividends received from stock
investments in less-than-20%-owned
U.S. corporations 9,000
Interest income
State bonds $ 2,500
Certificates of deposit 4,000 6,500
Total income $1,099,500
Expenses
Salaries-officers
Nancy Trout $150,000
Delores Lake 150,000 $300,000
Salaries-clerical and sales 232,000
Taxes (state, local, and payroll) 68,000
Repairs and maintenance 45,000
Interest expense:
Business loans $ 10,000
Loan to purchase state bonds 1,800 11,800
Advertising 5,000
Rental expense 38,000
Depreciation* 32,000
Charitable contributions 12,000
Employee benefit programs 19,000
Premiums on term life insurance policies
on lives of Nancy Trout and Delores
Lake; Kingfisher is the designated
beneficiary 12,800
Legal and accounting services 16,000
Total expenses (791,600)
Net income before taxes $ 307,900
Federal income tax (105,593)
Net income per books $ 202,307