1. John Parsons (123-45-6781) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111120), a Tax Forms candy company located at 1005 16th Street, Cut and Shoot, TX 77303. Problem Premium's S election was made on January 15, 2012, its date of incorporation. The following information was taken from the company's 2020 income statement ProConnect Tax Interest income Gross sales receipts Beginning inventory Direct labor Direct materials purchased Direct other costs Ending inventory Salaries and wages Officers' salaries ($75,000 each to Parsons and Smith) Repairs Depreciation expense, tax and book Interest expense Rent expense (operating) Taxes Charitable contributions (cash) Advertising expenses Payroll penalties Other deductions Book income A comparative balance sheet appears below. $ 100,000 2,410,000 9,607 (203,102) (278,143) (249,356) 3,467 (442,103) (150,000) (206,106) (15,254) (35,222) (40,000) (65,101) (20,000) (20,000) (15,000) (59,899) 704,574 A comparative balance sheet appears below. January 1, 2020 December 31, 2020 $ 47,840 93,100 9,607 Cash Accounts receivable Inventories Prepaid expenses Building and equipment Accumulated depreciation Land Total assets 8,333 138,203 (84,235) 2,000 $214,848 $ ? 123,104 3,467 17,582 185,348 (?) 2,000 $844,422 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 $214,848 $ 72,300 2,100 24,300 30,000 ? $844,422 Premium's accounting firm provides the following additional information. Distributions to shareholders $100,000 Beginning balance, Accumulated adjustments account 111,148 Ordinary business income for QBI 639,574 W-2 wages for QBI 795,205 Prepare Premium's Form 11205 and Schedule K-1s for John Parsons and George Smith, 5607 20th Street, Cut and Shoot, TX 77303. Suggested software: ProConnect Tax