Express Catering, Inc. (EC) is organized in the state of New York as a corporation and is taxed as a C corporation with a calendar year-end. EC operates a delicatessen/bakery in New York City, NY that specializes in mobile food catering for events and gatherings within the tri-state area. ECs address (unchanged since inception), employer identification number (EIN), and date of incorporation are as follows: Express Catering, Inc. 257 West 55th Avenue New York City, NY 10027 EIN: 13-9823459 Date of Incorporation: March 17, 2013 ECs address has not changed since its inception. EC has been rapidly expanding its catering business. This expansion has required a significant amount of new equipment purchases. EC sold some of its liquid investments in order to avoid having to take on debt to fund these purchases. Further, EC invested heavily in its catering business by significantly increasing its advertising budget. EC and its officers expect that revenue increases from these expenditures will begin next year. EC is owned by four related shareholders from the same family for the entire year: Raphael Giordano (father) and his three children Silvia, Andrea, and Marco. None of ECs shareholders are non-U.S. persons. There are currently 10,000 shares of EC common stock issued and outstanding (EC has never issued preferred stock). Copyright 2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. The shareholders are also employees of EC and its only corporate officers. The relevant shareholder and officer information for the current year is provided below. Officer compensation is included in Employee Salaries on the income statement. Their personal information is provided below: Raphael Giordano 160 West 57th Avenue New York City, NY 10027 SSN: 356-87-4322 Shares owned 5,500 100% of time devoted to the business, compensation of $150,000 Silvia Giordano Costa 250 South Main Hoboken, New Jersey 07030 SSN: 284-58-4583 Shares owned 1,500 100% of time devoted to the business, compensation of $130,000 Andrea Giordano 65 East 55th Avenue New York City, NY 10027 SSN: 423-84-2343 Shares owned 1,500 100% of time devoted to the business, compensation of $130,000 Marco Giordano 160 West 57th Avenue New York City, NY 10027 SSN-487-27-4797 Shares owned 1,500 100% of time devoted to the business, compensation of $120,000 EC follows the accrual method of accounting (GAAP) and is not a member of any consolidated or affiliated group of entities. EC is not audited by a CPA firm and has never had to restate its financial statement information. Supplementary Details: The dividends received by EC during the year were paid by Apple, Inc. (EC owns less than 20% of Apple, Inc.s stock). EC had its sole municipal bond (New York City) redeemed (bought back) in the current year. EC originally purchased the New York City bonds on February 1, 2016 for $100,000 (no premium or discount paid). The bond was redeemed by New York City on February 1, 2019 for $100,000. Both tax basis and proceeds received on this transaction were reported to EC on a Form 1099-B. EC purchased 200 shares of Apple, Inc. on October 10, 2016 for $100,000 (including commission). On July 10, of the current year, EC sold the 200 shares of Apple, Inc. for $350 a Copyright 2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. share (including commission). Both tax basis and proceeds received on this transaction were reported to EC on a form 1099-B. During the year, EC contributed $8,000 to the American Lung Association. On December 10, EC paid Madison Advertising $27,500 to design a new catering advertisement campaign for next year. This money represented half of the total $55,000 contract price. EC expects that the services will be provided and delivered to EC on about June 30, 2019. EC prepaid an insurance premium of $21,000 in September. The new policy is effective October 1, 2019 through September 30, 2020. ECs regular tax depreciation for the year is correctly calculated as $350,000 before considering the current year fixed asset additions of $840,000 (see table below). EC wants to claim the fastest recovery method(s) possible on these asset additions without electing any 179 expensing. EC acquired the following new fixed assets from unrelated parties in 2019: EC reports employee compensation amounts that remained unpaid at year-end in Accrued Bonuses, Accrued Vacation and Accrued Wages on the balance sheet, as applicable. The table below provides a summary of the balances in these accounts for December 31, 2018 and 2019. Description Date Purchased Amount 5-year MACRS Property October 2, 2019 $480,000 7-year MACRS Property September 10, 2019 $320,000 Delivery Truck (over 6,000 lbs): 5-year MACRS Property October 12, 2019 $40,000 Balance Sheet Date Account Description Account Balance Applicable Employees Payment Date 12/31/2018 Accrued Bonuses $45,000 ECs Shareholders (father and children) 01/20/2019 12/31/2018 Accrued Vacation $62,500 Unrelated Employees 04/01/2019 11/30/2019 12/31/2018 Accrued Wages $44,500 ECs Shareholders (father and children) 01/20/2019 12/31/2019 Accrued Vacation $73,000 Unrelated Employees Unpaid as of 03/15/2020 12/31/2019 Accrued Wages $51,500 ECs Shareholders (father and children) 01/22/2020 Supplementary Details (continued): On November 1, a large insurance company paid EC a $100,000 deposit to reserve catering event services on March 18, 2020 at the insurance companys annual meeting in New York City. The deposit is fully refundable until January 15, 2020. Thereafter, half of the deposit becomes non-refundable. Meal expenses were incurred for clients and EC staff at important meetings where business was conducted. EC did not incur any entertainment-related expenses in 2019. Copyright 2021 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. EC values its inventory at cost and has always used the specific identification method for reporting purposes. The company has never written down any inventory for any reason and the rules of Section 263A (UNICAP) do not apply to EC.