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 |
505,600 |
|
Amount |
3,096 |
|
End of |
|
|
(Schedule |
2,564,100 |
Due
Date
Upload to : Tax Return #1Dropbox
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 kingfisher@kf.com.
• 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 10,000 24,000
Total income
$1,444,000
Expenses
Salaries—officers
Nancy Trout $160,000
Delores Lake 160,000 $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 bonds 8,000 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). If you
solve this
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 assets 3,600 2,000
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 earnings
1,272,900 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
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