b. How does the tax law 1-30 Sam Smith (446-46-4646) and Jane Jones ate The presi- Bike Shop, Inc. The corporation was formed on May 1, 2001. Sam is the the remaining 30 percent. Both are full-time employees. Sam received a salary of dent and owns 70% of the stock while Jane is the secretary-treasurer and owns $150,000, and Jane received a salary of $60,000. Other pertinent information is given below. 9 The corporation is an accrual-method, calendar-year taxpayer. Inventories are determined using the lower of cost or market method. The corporate headquarters are located at 1234 Wheeling Road, Cincinnati, OH 45202. 9 The employer identification number is 75-4476243. A tentative income statement and balance sheet for the corporation are given below. December 31, Assets Cash Accounts receivable.. Allowance for doubtful accounts U.S. Treasury bonds. Stocks Inventory. Equipment. Land Building. Accumulated depreciation. Liabilities and Equity Accounts payable Notes payable (due within 1 year). Capital stock (all common) Retained earnings (unappropriated).. January 1, 2022 2022 $ 110,000 $ 691,000 14,000 31,000 (2,000) (6,000) 20,000 20,000 50,000 70,000 375,000 375,000 295,000 405,000 164,000 164,000 500,000 500,000 (211,000) (251,000) $1,315,000 $1,999,000 January 1, December 31, 2022 2022 65,000 350,000 500,000 400,000 150,000 150,000 600,000 1,099,000 $1,315,000 $1,999,000 Debit Credit Sales $2,100,000 Purchases $700,000 Dividends 5,000 Interest income on U.S. Treasury bonds. 10,000 Salaries-officers.. 210,000 Salaries-sales and clerical. 265,000 Repairs and maintenance. 20,000 Bad debt expense 5,000 Interest expense Charitable contributions. Depreciation (per books) Advertising Meals and entertainment. Taxes (state, local, and payroll) Life insurance premiums Long term capital gain. 14,000 60,000 40,000 14,000 16,000 50,000 10,000 7,000 Long term capital loss Federal income taxes paid 9,000 150,000 . The company provided the following additional information: The corporation distributed a cash dividend of $60,000 during the year. Tax depreciation for the year was $50,000. Meals and entertainment includes the corporation's expense for a suite at Paul Brown Stadium, home of professional football's Cincinnati Bengals. The cost of the suite was $10,000, which includes event tickets of $4,000. The corporation's estimated bad debt expense for the year was $5,000. Actual bad debts were $1,000. Life insurance premiums were paid on term policies covering the lives of the two owners. The corporation is the beneficiary. Dividends received were from stock investment in less than 20% owned U.S. corporations. The company took a physical count of its inventory on the last day of the year. On that date, it was determined that ending inventory was $360,000. This is not reflected in the financial statements above. Each of the four $37,500 timely made estimated tax payments were recorded as Federal income taxes paid. Prepare Form 1120 for the corporation. Use 2022 tax law. Use a 2021 1120 Form if the 2022 forms are not available.