Question
Completing Form 1120S GENERAL COMPANY INFORMATION Thomas King (president) and Dawn Valentine (vice president) each own 50% of King & Valentine, Inc. (KVI). No other
Completing Form 1120S
GENERAL COMPANY INFORMATION
Thomas King (president) and Dawn Valentine (vice president) each own 50% of King & Valentine, Inc. (KVI). No other class of stock is authorized. On February 4, 2005, they formed KVI to provide accounting and tax services. It was known for its slogan, "Royal Service From Accountants Who Care."
KVI's business address is 219 Accountants Lane, Indianapolis, IN 46424; its telephone number is (317) 243-1120; and its e-mail address is .
Its employer identification number is 31-4655421 and the principal business activity code is 541210.
Thomas and Dawn are the only full-time accountants employed by KVI and they perform all of the accounting services of the corporation. Thomas's Social Security number is 308-99-2431 and Dawn's Social Security number is 410-50-8840.
KVI is a cash-method, calendar-year taxpayer. KVI uses the straight-line method of depreciation for both book and tax purposes. (You are not provided enough detailed data to be completing Form 4562 [depreciation]. Enter the amount of depreciation on line 14 of Form 1120S.) The corporation does not maintain any inventory.
During the year, the corporation distributed cash of $26,291 (13,145.50 per shareholder).
KVI Income Statement
Income:
Accounting fees$896,000
Interest income (certificates of deposit)3,600
Total Income$899,600
Expenses:
Salaries-officers:
Thomas King$260,000
Dawn Valentine260,000$520,000
Salaries-clerical42,000
Taxes:
Property26,810
Payroll28,280
State income3,140
Other miscellaneous7,39065,620
Repairs and maintenance16,340
Meals and entertainment8,460
Travel5,600
Charitable contributions1,200
Interest expense on business loans31,100
Advertising23,250
Rental expense14,650
Depreciation28,910
Contributions to pension plans45,000
Employee benefit programs21,170
Accounting service12,500
Dues and subscriptions5,100
Insurance20,750
Legal and professional services11,000
Miscellaneous4,360
Telephone7,700
Total expenses(884,710)
Net income$ 14,890
KVI Balance Sheet
AssetsJanuary 1, 20XXDecember 31, 20XX
Cash$21,610$22,580
Accounts Receivable41,10033,300
Certificates of deposit144,000137,000
Depreciable assets210,922221,488
Accumulated depreciation(47,520)(76,430)
Land42,00042,000
Other assets3,6382,490
Total Assets$ 415,750$ 382,428
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Liabilities and EquityJanuary 1, 20XXDecember 31, 20XX
Accounts payable$21,000$16,036
Other current liabilities17,11011,853
Mortgages126,000114,300
Capital stock200,000200,000
Retained earnings51,64040,239
Total Liabilities and Equity$ 415,750$ 382,428
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