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Harrell and Smith, Inc., 204 Ambulance Street, Anywhere, CA 92345, is a corporation (EIN 57-1234567) formed on January 1, 2010. Information concerning the corporation and

Harrell and Smith, Inc., 204 Ambulance Street, Anywhere, CA 92345, is a corporation (EIN 57-1234567) formed on January 1, 2010. Information concerning the corporation and its two shareholders follows. It uses tax/cash basis accounting, did not pay dividends in excess of earnings and profits, has no foreign shareholders, is not publicly traded, and has no NOL carrybacks.

Bruce Harrell (SSN 412-34-5670), 1018 Lexington Downs, Anywhere, CA 92345, is a 60% shareholder. Della Smith (SSN 412-34-5671), 4564 Yates Road, Anywhere, CA 92345, is a 40% shareholder. Bruce received a dividend of $60,000, and Della received a dividend of $40,000. Both of these dividends are in addition to their salaries.

HARRELL AND SMITH, INC. Comparative Balance Sheet As of December 31, 2014, and December 31, 2015

12/31/14 12/31/15
Assets
Cash $ 39,955 $ 45,459
Investments 258,456 169,125
Office equipment 225,000 310,759
Accumulated depreciation (equipment) (156,000) (165,379)
Building 491,200 491,200
Accumulated depreciation (building) (37,232) (49,826)
Total assets $821,379 $801,338
Liabilities and equity
Notes payable $353,600 $335,458
Common stock 10,000 10,000
Retained earnings 457,779 455,880
Total liabilities and equity $821,379 $801,338

HARRELL AND SMITH, INC. Income Statement For the Year Ending December 31, 2015
Revenue
Consulting income $866,689
Interest income 4,231
Rental income 9,000
Dividend income from less-than-20%-owned domestic corporation(qualified) 8,234
Long-term capital losses (8,200)
Total revenue $879,954
Expenses
Salaries and wages (nonowners) $253,000
Officers salaries
Harrell 225,000
Smith 150,000
Depreciation 21,973
Interest expense 20,127
Taxes and licenses 24,051
Utilities 15,500
Travel 11,850
Meals and entertainment (100%) 12,452
Auto 18,500
Insurance (health) 7,000
Accounting and legal 6,450
Repairs 3,200
Charitable contributions 12,000
Payroll penalties 750
Total expenses $781,853
Net income $ 98,101

Prepare Form 1120, pages 1 5, for Harrell and Smith, Inc. Schedule D and Form 4562 can be omitted (the information given is not sufficient to complete these forms).

(Enter all amounts as positive unless otherwise indicated in the forms themselves. Round your intermediate computations and final answers to the nearest whole dollar value.)

Use the appropriate Corporate Tax Tables., for Harrell and Smith, Inc. Schedule D and Form 4562 can be omitted (the information given is not sufficient to complete these forms).

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