John Parsons (123-45-6781) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111120), a candy company located at 1005 16th Street, Cut and Shoot, TX 77303. Premium's S election was made on January 15, 2012, its date of incorporation. The following information was taken from the company's 2020 income statement. Interest income Gross sales receipts Beginning inventory Direct labor Direct materials purchased Direct other costs $ 100,000 2,410,000 9,607 (203,102) (278,143) (249,356) Ending inventory 3,467 Salaries and wages (442,103) Officers' salaries ($75,000 each to Parsons and Smith) (150,000) Repairs (206,106) Depreciation expense, tax and book (15,254) Interest expense (35,222) Rent expense (operating) (40,000) Taxes (65,101) Charitable contributions (cash) (20,000) Advertising expenses (20,000) Payroll penalties (15,000) Other deductions Book income (59,899) 704,574 January 1, 2020 December 31, 2020 Cash Accounts receivable Inventories Prepaid expenses $ 47,840 93,100 $ ? 123,104 9,607 3,467 8,333 17,582 Building and equipment 138,203 185,348 Accumulated depreciation (84,235) (?) Land 2,000 Total assets $214,848 4,500 2,000 $844,422 $ 72,300 Accounts payable $ 42,500 Notes payable (less than 1 year) Notes payable (more than 1 year) Capital stock Retained earnings Total liabilities and capital 2,100 26,700 24,300 30,000 30,000 $111,148 ? $214,848 $844,422 Premium's accounting firm provides the following additional information. Distributions to shareholders (not reported on Form 1099-DIV and made based on percentage of ownership): $100,000 Beginning balance, Accumulated adjustments account: 111,148 Ordinary business income for QBI: 639,574 W-2 wages for QBI: 795,205 Part II Information About the Shareholder D Shareholder's identifying number E 123-45-6781 Shareholder's name, address, city, state, and ZIP code John Parsons 5607 20th Street Cut and Shoot, TX 77303 X F Current year allocation percentage. 70 % G Shareholder's number of shares Beginning of tax year . . . . End of tax year... H Loans from shareholder Beginning of tax year . . . . End of tax year A A X Liabilities and Shareholders' Equity 16 Accounts payable. . 42,500 72,300 17 Mortgages, notes, bonds payable in less than 1 year 4,500 2,100 18 Other current liabilities (attach stmt) . 19 Loans from shareholders. 20 Mortgages, notes, bonds payable in 1 year or more 26,700 24,300 21 Other liabilities (attach statement). 22 Capital stock. 30,000 30,000 23 Additional paid-in capital. 24 Retained earnings. 111,148 715,722 25 Adjustments to shareholders' equity (attach stmt). 26 Less cost of treasury stock 27 Total liabilities and shareholders' equity 214,848 844,422 Form 1120-S (2020)