Comprehensive Problem 09-80 (LO 09-1, LO 09-2, LO 09-3, LO 09-4, LO 09-5, LO 09-6) (Algo)

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Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $128,000, and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $72,700 and was appraised at $198,000. The land was also encumbered with a $72,700 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year, Blue Bell made a $8,800 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information:

Sales revenue	$ 497,000
Cost of goods sold	424,400
Operating expenses	84,400
Long-term capital gains	2,670
1231 gains	900
Charitable contributions	300
Municipal bond interest	300
Salary paid as a guaranteed payment to Deanne (not included in expenses)	3,000

c. Using the information generated in answering parts (a) and (b), prepare Blue Bell's page 1 and Schedule K to be included with its Form 1065 for its first year of operations, along with Schedule K-1 for Deanne. Prepare Form 1065. 1065 PG 1, Schedule K, Form 1065 Schedule K1.