Question;On November 1, 2006, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized as follows:*Pet Kingdom's business address is 1010 Northwest Parkway, Dallas, TX 75225, its telephone number is (214)555-2211, and its email address is p..email@example.com.*The employer identification number is 11-111111, and the principal business activity code is 453910.*Janet and Kim each own 50% of the common stock, Janet is president and Kim is vice president of the company. No other class of stock is authorized.*Both Janet and Kim are full-time employees of Pet Kingdom. Janet's Social Security number is 123-45-6789, and Kim's social security number is 987-65-4321.*Pet kingdom is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Pet Kingdom uses the straight-line method of depreciation for book purposes and accelerated depreciation (MACRS) for tax purposes.*During 2012, the corporation distributed cash dividends of $300,000.Pet Kingdom's financial statements for 2012 follow.Income StatementIncomeGross Sales $6,900,000Sales returns and allowances (240,000)Net Sales $6,660,000Cost of Goods Sold (2,760,000)Gross Profit $3,900,000Dividends received from stockinvestments in less-than-20%-owned U.S. corporations $52,000Interest Income:State bonds $18,000Cert. of Deposits 24,000 42,000Total Income $3,994,500Expenses:Salaries - officers:Janet Morton $315,000Kim Wong 315,000 $630,000Salaries - clerical and sales 870,000Taxes (state,local, and payroll) 285,000Repairs & maintenance 168,000Interest Expense:Loan to purch. state bonds $10500Other business loans 261,000 $271,500Advertising 69,000Rental Expense 129,000Depreciation* 120,000Charitable Contributions 45,000Employee benefit programs 72,000Premiums on term life insurancepolicies on lives of janet mortonand kim wong, pet kingdom isthe designated beneficiary 48,000Total Expenses ($2,707,500)Net income before taxes $1,287,000Federal Income Tax (423,555)Net Income per books $863,445*depreciation for tax purposes is $165,000.Balance sheetAssets Jan. 1, 2012 Dec. 31, 2012Cash $1,056,000 $ 784,000Trade Notes & Acct. Rec. 1,815,000 2,012,000Inventories 3,300,000 3,636,000Stock Investment 990,000 990,000State Bonds 330,000 330,000Cert. of Deposits 385,000 385,000Prepaid Federal Tax -0- 4,445Buildings & otherdeprec. assets 4,805,000 4,805,000Accumulated Depreciation (727,000) (847,000)Land 715,000 715,000Other Assets 123,000 113,000Total Assets $12,792,000 $12,900,445Liabilities and Equity Jan. 1, 2012 Dec. 31, 2012Accounts payable $2,035,000 $1,837,000Other current liabilities 213,000 184,000Mortgages 4,550,000 4,322,000Capital Stock 3,000,000 3,000,000Retained Earnings 2,994,000 3,557,445Total Liabilities & equity $12,792,000 $12,900,445During 2012, Pet Kingdom made estimated tax payments of $107,000 each quarter to the IRS. Prepare a Form 1120 for Pet Kingdom for tax year 2012.
Paper#37923 | Written in 18-Jul-2015Price : $47