Question
At the end of the term we are required to complete 2018 IRS Form 1120. This is a partial credit, milestone project related to only
At the end of the term we are required to complete 2018 IRS Form 1120. This is a partial credit, milestone project related to only calculating the gross income for the final computation that will be due. For this milestone the two questions are: 1) Based on the below information from the income statement and balance sheet, what is Apex Corps gross income? 2) In an excel spreadsheet list all included and excluded items in column A. In column B, explain why the item is either included or excluded.
Apex Corporation was incorporated on January 1, 2018.Here is the income statement for
Apex Corp. for 2018.
Revenue from sales
40,000,000
Cost of goods sold
27,000,000
Gross profit
13,000,000
Other income:
Income from investment in corporate stock
300,000
Interest income
20,000
Capital gains (losses)
-4000
Gain or loss from disposition of fixed assets
3,000
Miscellaneous income
50,000
Gross income
13,369,000
Expenses:
Compensation
7,500,000
Stock option compensation
200,000
Advertising
1,350,000
Repairs and maintenance
75,000
Rent
22,000
Bad debt expense
41,000
Depreciation
1,400,000
Warranty expenses
70,000
Charitable donations
500,000
Meals
18,000
Goodwill impairment
30,000
Organizational expenditures
44,000
Other expenses
140,000
Total expenses
11,390,000
Income before taxes
1,979,000
Provision for income taxes
720,000
Net income before taxes
1,259,000
APEX Corporation Balance Sheet
January 1, 2017 (in $)
Current Assets
Cash Investment in Bonds
580,000
Accounts Receivable
470,000
Less Allowance for bad debts
0
Accounts Receivable (net)
470,000
Inventory
300,000
Total Current Assets
1,350,000
Non Current Assets
Fixed Assets
21,170,000
Less Accum. Depreciation
0
Fixed Assets (net)
21,170,000
Life Insurance
0
Investments in stocks
10,050,000
Goodwill
120,000
Total Noncurrent Assets
31,340,000
Total Assets
32,690,000
Liabilities and Shareholders' Equity
Current Liabilities
Accounts Payable
370,000
Reserve for Warranties
800,000
Total Current Liabilities
1,170,000
Non Current Liabilities
Long -term debt
19,000,000
Deferred compensation
0
Deferred tax Liabilities
0
Total Non Current Liabilities
19,000,000
Total Liabilities
20,170,000
Shareholders' Equity
Common Stock ( $1 par value)
5,000,000
Additional Paid In Capital
7,520,000
retained earnings
0
Total Shareholders' Equity
12,520,000
Total Liabilities and Shareholders' Equity
32,690,000
Here is other data:
1.The total compensation of officers is $2,500,000; other wages and salaries is $5,000,000.
2.Apex actually wrote off $27,000 of its accounts receivable as uncollectible.
3.Charitable contributions, $500,000, were all cash contributions.
4.Tax depreciation was $1,900,000.
5.Apex wrote off $30,000 of goodwill as impaired.
6.Apex's dividends received deduction is $130,000
7.Apex made $480,000 in estimated tax payments.
8.Apex's taxable interest income is $8,000.
9.Apex's other deductions are 166,600.
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