Question
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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