Compute book tax differences and taxable income.

Mario and Bruce each own 50% of the outstanding common stock and no other class of stock is authorized. Mario is the president and Bruce is the vice-president; they are not related. Both are full-time employees and the corporation has no other officers. Each receives a salary of $150,000. Mario's Social Security number is 344-27-4503; Bruce's is 421-24-0817 Opportunity Landscaping's 2018 trial balance includes the following information: Debit Credit Account Gross sales 2,793,700 92,000 758,000 Sales returns and allowances Cost of goods sold Dividends received from stock investments in less than 20% owned U.S. corporations 23,000 Interest income: Certificates of deposit (PNC Bank ) 6,100 2,200 State bonds Premiums on term life insurance (the policies are owned by the corporation and cover Mario and Bruce; the corporation is the beneficiary) Compensation of officers Salaries and wages (non-officers) Repairs 12,000 300,000 477,000 23,745 8,500 28,000 9,200 16,700 106,200 Bad debts Rental expense Entertainment expenses Travel (includes $1,200 of meals ) Taxes (state, local, payroll) Interest expense: Loan to purchase state bonds Other business loans (including mortgage) 370 6,285 15,000 42,000 41,200 2,500 187,902 Charitable contributions Depreciation Advertising Miscellaneous expenses Federal income tax expense 2,126,602 2,825,000 Totals $ Book Income 698,398 Other Information: The corporation uses the accrual method of accounting and reports on a calendar year basis Inventories are determined under the lower of cost or market method and Opportunity Landscaping uses the uniform capitalization (UCAP) rules for tax purposes. Information regarding the cost of goods sold is as follows: ooks $ 635,000 705,700 622,000 206,700 Beginning inventory (1/1/18) Ending inventory (12/31/18) Purchases and Indirect Costs $ 655,000 755,000 622,000 206,700 25,300 Labor Additional indirect costs (UCAP) Opportunity Landscaping uses the reserve method for accounting for bad debts for book purposes. Accounts directly written off during 2018 amounted to $5,500. Tax depreciation (computed using MACRS) amounted to $53,000 (no assets were purchased in 2018; all depreciation relates to prior year acquisitions). Contributions of inventory were made to several qualified charities during the year ($15,000 FMV; $7,000 basis). During 2018, the corporation made estimated tax payments of $200,000 to the IRS and distributed $90,000 in dividends to its shareholders A comparative balance sheet for Opportunity Landscaping, Inc. follows. Assets December 31, 2018 January 1, 2018 Cash 54,000 133,920 5,000) 635,000 $ 71,410 216,767 8,000) 705,700 Trade accounts rece ivable Allowance for bad debts Inventories Investments: 220,000 105,000 420,000 105,000 12,098 257,000 124,260) 21,000 3,115 $ 1,679,830 Stock State bonds Prepaid federal income taxes Buildings and other depreciable assets Accumulated depreciation 257,000 82,260) 21,000 Land Other assets 2,290 $ 1,340,950 Total Assets Liabilities and Equity Accounts payable $ 340,000 53,490 175,000 200,000 572,460 $ 1,340,950 108,362 22,610 168,000 200,000 1,180,858 $1,679,830 Other current liabilities Mortgages Capital stock Retained earnings Total Liabilities and Equity Mario and Bruce each own 50% of the outstanding common stock and no other class of stock is authorized. Mario is the president and Bruce is the vice-president; they are not related. Both are full-time employees and the corporation has no other officers. Each receives a salary of $150,000. Mario's Social Security number is 344-27-4503; Bruce's is 421-24-0817 Opportunity Landscaping's 2018 trial balance includes the following information: Debit Credit Account Gross sales 2,793,700 92,000 758,000 Sales returns and allowances Cost of goods sold Dividends received from stock investments in less than 20% owned U.S. corporations 23,000 Interest income: Certificates of deposit (PNC Bank ) 6,100 2,200 State bonds Premiums on term life insurance (the policies are owned by the corporation and cover Mario and Bruce; the corporation is the beneficiary) Compensation of officers Salaries and wages (non-officers) Repairs 12,000 300,000 477,000 23,745 8,500 28,000 9,200 16,700 106,200 Bad debts Rental expense Entertainment expenses Travel (includes $1,200 of meals ) Taxes (state, local, payroll) Interest expense: Loan to purchase state bonds Other business loans (including mortgage) 370 6,285 15,000 42,000 41,200 2,500 187,902 Charitable contributions Depreciation Advertising Miscellaneous expenses Federal income tax expense 2,126,602 2,825,000 Totals $ Book Income 698,398 Other Information: The corporation uses the accrual method of accounting and reports on a calendar year basis Inventories are determined under the lower of cost or market method and Opportunity Landscaping uses the uniform capitalization (UCAP) rules for tax purposes. Information regarding the cost of goods sold is as follows: ooks $ 635,000 705,700 622,000 206,700 Beginning inventory (1/1/18) Ending inventory (12/31/18) Purchases and Indirect Costs $ 655,000 755,000 622,000 206,700 25,300 Labor Additional indirect costs (UCAP) Opportunity Landscaping uses the reserve method for accounting for bad debts for book purposes. Accounts directly written off during 2018 amounted to $5,500. Tax depreciation (computed using MACRS) amounted to $53,000 (no assets were purchased in 2018; all depreciation relates to prior year acquisitions). Contributions of inventory were made to several qualified charities during the year ($15,000 FMV; $7,000 basis). During 2018, the corporation made estimated tax payments of $200,000 to the IRS and distributed $90,000 in dividends to its shareholders A comparative balance sheet for Opportunity Landscaping, Inc. follows. Assets December 31, 2018 January 1, 2018 Cash 54,000 133,920 5,000) 635,000 $ 71,410 216,767 8,000) 705,700 Trade accounts rece ivable Allowance for bad debts Inventories Investments: 220,000 105,000 420,000 105,000 12,098 257,000 124,260) 21,000 3,115 $ 1,679,830 Stock State bonds Prepaid federal income taxes Buildings and other depreciable assets Accumulated depreciation 257,000 82,260) 21,000 Land Other assets 2,290 $ 1,340,950 Total Assets Liabilities and Equity Accounts payable $ 340,000 53,490 175,000 200,000 572,460 $ 1,340,950 108,362 22,610 168,000 200,000 1,180,858 $1,679,830 Other current liabilities Mortgages Capital stock Retained earnings Total Liabilities and Equity