Reference no: EM131563071

Problem -

Willy Wonka (SSN: 999-88-7145) is the sole shareholder of Yummy, Inc., a candy company.  He also has 2 other employees. Yummy' s financial information for 2016 and selected from 2015is as follows:

	2015	2016
Cash	47,840	?
Inventory	9,607	3,467
Accounts receivable	48,100	123,104
Prepaid Expenses	8,333	17,582
Other investments	100,000	100,000
US Treasury Securities	25,000	25,000
Tax Exempt Securities	20,000	20,000
Equipment and buildings	138,203	185,348
Accumulated depreciation	(84,235)	(99,489)
Land	2,000	2,000
Total assets	314,848	?
Accounts payable	42,500	72,300
Notes payable in 2017	4,500	2,100
Notes payable long-term	26,700	24,300
Capital stock	30,000	30,000
Retained earnings	211,148	?
Total liabilities & stockholder's equity	314,848	?

Other information:

Sales	2,410,000
Interest Income	100,000
Dividend Income	15,000
Beginning Inventory	9,607
Direct Labor	403,102
Direct Materials Purchase	278,143
Direct Other Costs	493,546
Ending Inventory	3,467
Salaries and Wages	442,103
Officer Salary	150,000
Repairs	206,106
Depreciation Expense	15,254
Interest Expense	35,222
Rent Expense (operating)	40,000
Taxes - state income and property	65,101
Charitable contributions	35,000
Advertising Expenses	20,000
Payroll penalties	15,000
Other deductions	58,899
Federal Income Taxes	88,189

Interest income includes $10,000 from U.S. Government bonds and $5,000 from California State bonds.

The dividends were from Wrapper Designs, Inc.  Yummy owns 5% of Wrapper's stock.

Depreciation listed above is for book purposes.  For tax purposes, Yummy elects Section 179 for any eligible assets purchased during the year.  In 2015, the company purchased and placed in service used equipment (7 year property) on June 1 costing $12,000.  MACRS depreciation for assets placed in service prior to 2015 totaled $2,000.

Interest expense includes $32,222 for an operating loan and $3,000 for a loan to purchase the California state bonds.

Yummy distributed $100,000 in dividends to Wonka during 2016.

Hint: Yummy does not record deferred taxes.

Yummy is located at 28 Candy Highway, Candy, California, 12546.  Its employer identification number is 12-345678.  The corporation was formed on 7/5/2000.  They are on the accrual basis of accounting with a December 31 year end.  Timely quarterly federal estimated tax payments of $14,000 each were made for 2016.Yummy's 2015 federal tax was $55,000.

Prepare all required forms and schedules. Note: read the 1120 line instructions as you are completing the form 1120. If there is a line we have not studied at all, that should be ignored or marked no on the questions.  The instructions lead you to all other required forms.  Submit the completed return and schedules via a single PDF as per instructions. Do not submit form instructions.