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ACCT346 Part 3 -- Form 1120S




Question;Part 3 -- Form 1120SDuring the year ended 12/31/12, Esscorp Embalming:? Made distributions of $198,000 to Ms. Maine, and $22,000 to Dr. Badr.? Paid officer's compensation of $200,000 to Ms. Maine (who devoted 33% of her time to the business) and $100,000 to Dr. Badr (who devoted 100% of his time to the business).? Received exempt municipal interest income of $5,000.? Received dividend income of $30,000 from Wonder Cure, Inc., (in which Embalming has a 30% ownership interest) and $20,000 from corporations in which Embalming has less than a 20% ownership interest. All dividends are qualified dividends.? Paid no salaries/wages attributable to inventories.Also note that the owners had $373,500 (Ms. Maine) and $41,500 (Dr. Badr) in their capital accounts at the beginning of the year. The corporation?s balance sheets and income statement are presented in Exhibits 5 and 6, respectively.Exhibit 5Esscorp Embalming, Inc.Balance SheetYears ended December 31, 2011 and 2012Balances as ofASSETS 12/31/11 12/31/12Cash $25,000 $71,000Inventory $150,000 $100,000Depreciable assets (net) $300,000 $200,000TOTAL ASSETS $475,000 $371,000LIABILITIES & RETAINED EARNINGSAccounts payable (inventory) $10,000 $12,000Notes payable $25,000 $0Common stock $25,000 $25,000Retained earnings $415,0001 $334,000TOTAL LIABILITIES & RETAINED EARNINGS $475,000 $371,0001 Assume that the entire beginning balance is in AAA.1 ACCT 346 Fall 2013Exhibit 6Esscorp Embalming, Inc.Income StatementYear ended December 31, 2012Gross receipts $1,000,000Cost-of-Goods Sold ($250,000)Dividend Income $50,000Interest Income $20,000Capital losses ($35,000)$785,000Compensation of officers ($300,000)Salaries and wages ($120,000)Rents ($60,000)Property taxes ($10,000)Utilities ($24,000)Depreciation ($100,000)Charitable contributions ($20,000)Investment interest expense ($12,000)($646,000)$139,000Property Transactions Item Purchase**Price ? DateSalePrice ? Date100 shares of CYA stock $3,000 ? 1/1/00 $7,000 ? 1/15/122,000 shares of ABZ stock $100,000 ? 6/30/00 $54,000 ? 6/29/12City of LA Bonds $25,000 ? 10/15/11 $22,000 ? 2/14/12220 $125,000 ? 5/30/11 $135,000 ? 10/31/12**The taxpayer received 1099s for these transactions, but the basis was not reported to the IRS.2ACCT 346 Fall 2013RequiredUse the information presented to complete the assigned pages of the corporation?s Form 1120Sand Schedule D. Also complete one Schedule K-1 (Form 1120S) for Ms. Maine. (You will not be filing a complete return.) Use PDF forms from the IRS web site


Paper#40658 | Written in 18-Jul-2015

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