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. The company's S corporation election was made on January 15, 2007. The following information was taken from the income statement for 2012.

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 ....................................................... (150,000)

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

Depreciation expense ................................................. (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)

Book income .......................................................... 704,574

A comparative balance sheet appears below.

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

Premium's accounting firm provides the following additional information.
Distributions to shareholders .........................$100,000
Using the preceding information, prepare a complete Form 1120S and Schedule K-1s for John Parsons and George Smith, 5607 20th Street, Cut and Shoot, TX 77303. 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...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For  book-img-for-question

South Western Federal Taxation 2014 Comprehensive Volume

ISBN: 9781285180922

37th Edition

Authors: William H. Hoffman, David M. Maloney, William A. Raabe, James C. Young

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