Reference no: EM131796009
Assignment: Comprehensive Tax Return
CORPORATION (FORM 11205)
John Parsons (123-45-6781) 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, 2009, its date of incorporation. The following information was taken from the company's 2015 income statement.
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Interest income
|
100,000
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|
Gross sales receipts
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2,410,000
|
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Beginning inventory
|
9,607
|
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Direct labor
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(203,102)
|
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Direct materials purchased
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(278,143)
|
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Direct other costs
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(249,356)
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Ending inventory
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3,467
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Salaries and wages
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(442,103)
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Officers' salaries ($75,000 each to Parsons and Smith)
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(150,000)
|
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Repairs
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(206,106)
|
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Depreciation expense, tax and book
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(15,254)
|
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Interest expense
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(35,222)
|
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Rent expense (operating)
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(40,000)
|
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Taxes
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(65,101)
|
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Charitable contributions (cash)
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(20,000)
|
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Advertising expenses
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(20,000)
|
|
Payroll penalties
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(15,000)
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|
Other deductions
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(59,899)
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Book income
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704,574
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A comparative balance sheet appears below.
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January 1, 2015
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December 31, 2015
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Cash
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$ 47,840
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$ ?
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Accounts receivable
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93,100
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123,104
|
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Inventories
|
9,607
|
3,467
|
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Prepaid expenses
|
8,333
|
17,582
|
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Building and equipment
|
138,203
|
185,348
|
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Accumulated depreciation
|
(84,235)
|
(?)
|
|
Land
|
2,000
|
2,000
|
|
Total assets
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$214,848
|
$844,422
|
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Accounts payable
|
$ 42,500
|
$ 72,300
|
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Notes payable (less than 1 year)
|
4,500
|
2,100
|
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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
|
Premium's accounting firm provides the following additional information.
Distributions to shareholders $100,000
Beginning balance, Accumulated adjustments account $111,148
Using the preceding information, prepare a complete Form 1120 and Schedule K-1s for John Parsons and George Smith, 5607 20th Street, Cut and Shoot, TX 77303. Do not complete the Form 4562. If any information is missing, make realistic assumptions.