On february 12 1998 brandon short and michael allen formed

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Reference no: EM13600792

On February 12, 1998, Brandon Short and Michael Allen formed Angler Corporation to sell fishing tackle. Pertinent information regarding Angler is summarized as follows:
1. Angler's business address is 1717 Carlson Street, Sidney, NY 13838; its telephone number is (607) 555-2211; and its e-mail address.
2. The employer identification number is 11-1111111, and the principal business activity code is 451110.
3. Brandon and Michael each owned 50% of the common stock and are president aand vice president of the company, respectively. No other class of stock is authorized.
4. Both Brandon and Michael are full- time employees of Angler, and their Social Security numbers are 123-45-6789 and 978-65-4321.
5. Angler is an accrual method, calendar year tax payer. Inventories are determined using FIFO and the lower cost of market method. Angler uses the straight line method of depreciation for both book and tax purposes.
6. During 2008, the corporation distributed cash dividends of $80,000.
7. During 2008, Angler made estimated tax payments of $37,000 each quarter to the IRS.

Angler's Financial Statements for 2008 are shown on the following pages:

Income Statement
Income $2,300,000
Gross Sales (80,000)
Sales Returns and Allowances $2,220,000
Net Sales (920,000)
Cost of Goods Sold $1,300,000
Gross Profit
Dividends Received from stock investments
in less-than-20%-owned U.S. Corporations 120,000
Interest Income
State Bonds 14,000
Certificates of Deposit 10,000 24,000
Total Income $1,444,000

Expenses
Salaries-Officers
Brandon Short $160,000
Michael Allen 160,000 $320,000
Salaries-clerical and sales 290,000
Taxes (state, local and payroll) 85,000
Repairs and maintenance 56,000
Interest Expense
Loan to purchase state bonds $8,000
Other business loans 12,000 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 Brandon and Michael; Angler is
the designated beneficiary 16,000
Total Expenses $940,000
Net income before taxes $504,000
Federal Income tax (146,200)
Net income per books $357,800

*You are not provided enough detailed data to complete a form 4562(depreciation). If you solve this problem using TaxCut, enter the amount of deprecaiation on line 20 of Form 1120.

Balance Sheet
Assets January 1, 2008 December 31, 2008
Cash $ 480,000 $ 334,660
Trade notes and accounts receivable 808,400 1,084,600
Inventories 600,000 712,000
State bonds 160,000 160,000
Certificates of deposit 140,000 140,000
Prepaid federal tax 0 1,800
Buildings and other depreciable assets 240,000 240,000
Accumulated depreciation (88,800) (128,800)
Land 20,000 20,000
Other assets 3,600 2,000
Total assets 2,363,200 2,566,260

Liabilities and Equity January 1, 2008 December 31, 2008
Accounts payable $ 300,000 275,560
Other current liabilities 80,300 40,000
Mortgages 210,000 200,000
Capital stock 500,000 500,000
Retained earnings 1,272,900 1,550,700
Total liabilities and equity $ 2,363,200 2,566,260

Reference no: EM13600792

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