A new client has come to you for tax preparation services for 2020. Brady LLC wants to file as an 5 Corporation. They provided you with the following Income Statement and Balance Sheet Brady LLC Income Statement For year ending December 31, 2020 Sales Cost of goods sold Gross profit from operations Interest Income Owner's Compensation Meals Property taxes Payroll taxes Rent Expense Supplies Other Expenses Charitable Contributions Net Income $120,000 $150,000 ($30,000) $60 $25,000 $1,200 $500 $1,912.50 $12,000 $850 $1,090 $375 (572,86750) Brady LLC Balance Sheet 12/31/2020 Per Client $5.000 $0 $4,500 $500 Cash Inventory Equipment Accumulated Depreciation Total Assets Notes Payable Owners Capital Owners Distributions Total Liabilities and Equity 12/31/2019 Per Tax Return $3,200 $45.000 $4,500 $500 $53,200 $22.000 540,000 ($8.800 $53 200 $18,000 $40,000 ($6,000) This assignment is less about putting the values into a tax return software and more about testing your critical thinking skills. Clients often bring you incomplete accounting records. Often, you must determine what they ve failed to record or tell you about. This generally results in requesting additional information. Answer the following questions. 1. What expense is likely to be overstated on the clients Income Statement? How did you come to this conclusion? What other value would you need to ask the client for? 2. There are two expenses not recorded on the Income Statement at this time. Name those two expenses and which two Balance Sheet accounts will need to be updated on these expenses are recorded 3. What expense would not be fully deductible in most tax years? 4. What expense would not be recorded on the front of the tax return? Why is this reported elsewhere? 5. What income would not be recorded on the front of the tax return? Why is this reported elsewhere? 6. Is this client required to file a Balance Sheet with the tax return? Why or why not