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Margaret Brown and Joel Lee each own 50% of Designs Inc




Question;GENERAL COMPANY INFORMATIONMargaret Brown and Joel Lee each own 50% of Designs Inc. with no other class of stock is authorized. On June 6, 2009, they formed to provide design services. Their business activity code is 541400.Designs Inc.?s business address is 2134 Merry Lane, Las Cruces, NM 08801. The telephone number is (575) 541-1122, and the e-mail address is Eemployer identification number is 11-1111111. Margaret is the president of the company, and Joel is the vice- president. Margaret and Joel are the only full-time designers employed by Designs, Inc., and they perform all of the design services of the corporation. Margaret?s Social Security number is 123-45-6789, and Joel?s Social Security number is 555-48-9898.Designs, Inc. is an accrual method, calendar- year taxpayer. Designs, Inc. uses the straight-line method of depreciation for both book and tax purposes. (You are not provided enough detailed data to complete a Form 4562 (depreciation). Enter the amount of depreciation on line 20 of Form 1120.) The corporation does not maintain any inventory.During the year, the corporation distributed cash dividends of $15,192.Designs, Inc. Income StatementIncome:Design fees $739,000Interest income (certificates of deposit) 2,700Total iIncome $741,700Expenses:Salaries-?officers:Margaret Brown $190,000Joel Lee $190,000 $380,000Salaries-?clerical $61,000Taxes:Property 26,810Payroll 23,280State Incomeincome 3,140Other miscellaneous 2,390 55,620Repairs and maintenance 16,340Meals and entertainment 9,800Travel 5,600Charitable contributions 1,200Interest expense on business loans 31,100Advertising 17,650Rental expense 9,270Depreciation 35,910Contributions to pension plans 31,000Employee benefit programs 21,170Accounting service 13,790Dues and subscriptions 5,100Insurance 17,750Legal and professional services 11,000Miscellaneous 4,360Telephone 3,160Total expenses (730,820)Net income before taxes $ 10,880Federal income tax (5,192)Net income per books $ 5,688Designs, Inc. Balance SheetAssets January 1, 2011 December 31, 2011Cash $ 35,610 $ 42,580Accounts Rreceivable 45,100 43,300Certificates of deposit 134,000 143,000Depreciable assets 210,922 221,488Accumulated depreciation (47,520) (83,430)Land 42,000 42,000Other assets 3,638 2,490Total Aassets $ 423,750 $ 411,428====== ======Liabilities and Equity January 1, 2011 December 31, 2011Accounts payable $ 26,550 $ 27,497Other current liabilities 15,110 17,853Mortgages 126,000 114,300Capital stock 200,000 200,000Retained earnings 56,090 51,778Total Lliabilities and Eequity $ 423,750 $ 411,428


Paper#44410 | Written in 18-Jul-2015

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