Facts in 2018:

• ABC Inc., a S Corporation, 123 Oak Dr Houston TX 77002
• EIN-74-1234567
• Date S election effective- 1/1/2000
• Date Incorporated 1/1/2000
• Total Assets $3,195,000
• Business Activity, retail sales (product-family clothing)
• Business Code 448140
• The corporation is a cash basis business

• Gross Receipts $1,000,000
• Cost of Goods Sold $400,000 (assume no beginning and ending inventory and purchases are $400,000)
• ABC Inc. uses lower of cost or market for determining the cost of goods sold and the cash method for income and other expenses.
• Compensation to Bee Jones is $200,000
• Salaries and wages paid to non-shareholder employees are $50,000
• Office Rent paid for corporate office is $10,000
• Supplies expense totaled $40,000
• The corporation received tax-exempt income of $150,000.
• The corporation paid insurance premiums on a key employee of $5,000.
• Net income per books is $445,000.

• Beginning Balances:Accumulated Adjustments Account $100,000

Other Adjustments Account$ 25,000

• There are no distributions made to the shareholders.
• The corporation has no debts.
• There are no earnings and profits of the corporation.
• No payments are made that would require the issuance of Forms 1099.
• Shareholder informationis as follows:

PartnerTitleStockResidencySSN Address

• Bee JonesPresident40%TX222-22-2222124 Oak Dr, Houston TX 77002
• John SmithVice-President40%TX333-33-3333125 Oak Dr, Houston TX 77002
• Julie SmartSecretary20%TX444-44-4444126 Oak Dr, Houston TX 77002
• Bee Jones materially participates in the day-to-day operations while John Smith and Julie Smart are passive investors.

Balance Sheet per Books

Assets:

12/31/2017

12/31/2018

Cash

$250,000

$695,000

Land

$2,500,000

$2,500,000

Total assets

$2,750,000

$3,195,000

Liabilities and Shareholders' Equity:

Capital Stock

$100,000

$100,000

Unappropriated Retained Earnings

2,650,000

3,095,000

Total liabilities and shareholders' equity

$2,750,000

$3,195,000

The corporation has engaged you to prepare the 2018 Form 1120S.Include the Schedules K-1 and the Form 1125-A, Cost of Goods Sold and Form 1125-E