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.

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.

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January 1, 2012 47,840 93,100 9,607 8,333 138,203 (84,235) 2,000 214,848 December 31, 2012 Cash Accounts receivable Inventories Prepaid expenses Building and equipment 123,104 3,467 17,582 185,348 Accumulated depreciation Land Total assets 2,000 844,422 8 Accounts payable Notes payable (less than 1 year) Notes payable (more than 1 year) Capital stock Retained earnings Total liabilities and capital 42,500 4,500 26,700 30,000 111,148 3214,848 72,300 2,100 24,300 30,000 $844,422