Reference no: EM13695167
BUSINESS INCOME TAX
Forms to be turned in:
- Schedules C, J, K, L, M-1 & M-2
- Form 1120: 5 pages
- Form 1125-A (COGS): 1 page
- Schedule G: 1 page
- Form 1125-E: 1 page
- Compensation of Officers
Any other schedules/forms generated do not need to be turned in.
Check figures:
|
Total Income (line 11)
|
1,430,000
|
|
Taxable Income (line 30)
|
505,600
|
|
Amount of refund
|
3,096
|
|
End of tax year total assets
|
|
(Schedule L line15)
|
2,564,100
|
Due Date
Upload to : Tax Return #1 Dropbox by 11:59 p.m., Thursday, CT.
Question
During 2013, Pet Kingdom made estimated tax payments of $90,000 each quarter to
the IRS. Prepare a Form 1120 for Pet Kingdom for tax year 2013. Suggested software:
H&R BLOCK At Home.
2. On February 12, 2002, 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; 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 2013, the corporation distributed cash dividends of $80,000.
Kingfisher's financial statements for 2013 are shown below.
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. corporations 12,000
Interest income
State bonds $14,000
Certificates of deposit 10,00024,000
Total income $1,444,000
Expenses
Salaries-officers
Nancy Trout $160,000
Delores Lake160,000 $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 bonds8,000 20,000
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 Nancy Trout and Delores
Lake; Kingfisher is the designated
beneficiary 16,000
Total expenses ( 940,000)
Net income before taxes $504,000
Federal income tax(171,904)
Net income per books$332,096
* You are not provided enough detailed information to complete a Form 4562 (depreciation). Ifyou solvethis problem using H&R BLOCK At Home, enter the amount of deprecation on line 20 of Form 1120.
Balance Sheet
Assets January 1, 2013 December 31, 2013
Cash $380,000 $335,524
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- 3,096
Certificates of deposit 140,000 140,000
Stock investments 300,000 300,000
Building and other depreciable assets 240,000 240,000
Accumulated depreciation (88,800) (128,800)
Land 20,000 20,000
Other assets3,6002,000
Total assets$2,363,200$2,564,100
Liabilities and Equity January 1, 2013 December 31, 2013
Accounts payable $300,000 $299,104
Other current liabilities 80,300 40,000
Mortgages 210,000 200,000
Capital stock 500,000 500,000
Retained earnings1,272,900 1,524,996
Total liabilities and equity$2,363,200$2,564,100
During 2013, Kingfisher made estimated tax payments of $43,750 each quarter to the IRS. Prepare a Form 1120 for Kingfisher for tax year 2013. Suggested software: H&R