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On November 1 2006, Janet Morton and Kim Wong formed Pet Kingdom




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:*Business address is 1010 Northwest Parkway, Dallas TX 75225, phone is (214) 555-2211, email address is*EIN is 11-1111111, 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 the company. Janet's SSN is 1246789 and Kim's SSN is 987-65-4321.*Pet Kingdom is an accrual method, calendar year tax payer. Inventories are determined using FIFO and the lower of cost or market. The company uses straight-line method of depreciation for book purposes and accelerated/MACRS for tax purposes.*During 2012, the corp distributed cash dividends of $300,000.Financial Statement Summary Information:Income Statement:Income:Gross Sales $6,900,000Sales Returns & 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 US Corporations $52,500Interest Income:State Bonds $18,000Certificates of Deposit $24,000 Total Interest income: $42,000Total Income: $3,994,500Expenses:Salaries ? Officers:Janet Morton: $315,000Kim Wong: $315,000 TOTAL Salaries: $630,000Salaries ? Clerical and Sales: $870,000Taxes (State, local and payroll): $285,000Repair and Maintenance: $168,000Interest Expense:Loan to purchase State bonds $10,500Other Business Loans: $261,000 TOTAL Interest Expense: $271,500Advertising: $69,000Rental Expense: $129,000Depreciation: $120,000Charitable Contributions: $45,000Employee Benefit Programs: $72,000Premiums on term lifeinsurance policies on the lives ofJanet Morton and Kim Wong, PetKingdom is the 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 $165,00. I am not provided enough detailed data to complete a form 4562.)BALANCE SHEETASSETS Jan 1, 2012 Dec 31, 2012Cash $1,056,000 $748,000Trade notes & Accts. Receivable $1,815,000 $2,021,000Inventories $3,300,000 $3,636,000Stock Investments $990,000 $990,000State Bonds $330,000 $330,000Certificates of Deposit $385,000 $385,000Prepaid Federal Tax $0 $4,445Buildings/other Depr. Assets $4,805,000 $4,805,000Accum. 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 $3,577,445TOTAL 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#42884 | Written in 18-Jul-2015

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