John Parsons (123-45-6781) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111111),

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John Parsons (123-45-6781) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111111), a candy company located at 1005 16th Street, Cut and Shoot, TX 77303. Premium's S election was made on January 15, 2009, its date of incorporation. The following information was taken from the company's 2015 income statement. Premium's book income for the year was $704,574.

Interest income ............................................................$ 100,000

Gross sales receipts .......................................................2,410,000

Beginning inventory ...................................................... 9,607

Direct labor ................................................................(203,102)

Direct materials purchased ..............................................(278,143)

Direct other costs ..........................................................(249,356)

Ending inventory .......................................................... 3,467

Salaries and wages .......................................................(442,103)

Officers' salaries ($75,000 each to Parsons and Smith) .............(150,000)

Repairs .....................................................................(206,106)

Depreciation expense, tax and book .................................... (15,254)

Interest expense ........................................................... (35,222)

Rent expense (operating) ................................................ (40,000)

Taxes ....................................................................... (65,101)

Charitable contributions (cash) ......................................... (20,000)

Advertising expenses .................................................... (20,000)

Payroll penalties .......................................................... (15,000)

Other deductions .......................................................... (59,899)

A 2015 comparative balance sheet appears below.

John Parsons (123-45-6781) and George Smith (123-45-6782) are 70% and

Premium's accounting firm provides the following additional information.
Cash distributions to shareholders .......................................$100,000
Beginning balance, accumulated adjustments account ................$111,148
Using the preceding information, prepare a complete Form 1120S and Schedule K-1s for John Parsons and George Smith, both of whom live at 5607 20th Street, Cut and Shoot, TX 77303. Do not complete the Form 4562. If any information is missing, make realistic assumptions.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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South Western Federal Taxation 2017 Essentials Of Taxation Individuals And Business Entities

ISBN: 9780357109144

20th Edition

Authors: William A. Raabe, David M. Maloney, James C. Young, Annette Nellen

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