I need help with schedule M3 line 13 interest income Part C permanent difference On November 1, 2008, Janet Morton and Kim Wong formed Pet Kingdom, Inc , to sell pets and pet supplies Pertinent information regarding Pet Kingdom is summarized as follows Pet Kingdom's business address is 1010 Northwest Parkway, Dallas, TX 75225 its telephone number is (214) 555 2211 and its e mail address is petkingdom pki com The employer identification number is 11 1111112, and the principal business activity code is 453910 Janet and Kim each own 50 of the common stock Janet is president and Kim is vice president of the company No other class of stock is authorized Both Janet and Kim are full time employees of Pet Kingdom Janet's Social Security number is 123 45 6788, and Kim's Social Security number is 123 45 6787 Pet Kingdom is an accrual method, calendar year taxpayer Inventories are determined using FIFO and the lower of cost or market method Pet Kingdom uses the straight line method of depreciation for book purposes and accelerated depreciation (MACRS) for tax purposes During 2019, the corporation distributed cash dividends of $250,000 Pet Kingdom's financial statements for 2019 are shown below Income Statement Income Gross sales $5,750,000 Sales returns and allowances (200,000) Net sales $5,550,000 Cost of goods sold (2,300,000) Gross profit $3,250,000 Dividends received from stock investments in less than 20 owned U S corporations 43,750 Interest income State bonds $15,000 Certificates of deposit 20,000 35,000 Total income $3,328,750 Expenses Salariesofficers Janet Morton $262,500 Kim Wong 262,500 $525,000 Salariesclerical and sales 725,000 Taxes (state, local, and payroll) 238,000 Repairs and maintenance 140,000 Interest expense Loan to purchase state bonds $9,000 Other business loans 207,000 216,000 Advertising 58,000 Rental expense 109,000 Depreciation 106,000 Charitable contributions 38,000 Employee benefit programs 60,000 Premiums on term life insurance policies on lives of Janet Morton and Kim Wong Pet Kingdom is the designated beneficiary 40,000 Total expenses (2,255,000) Net income before taxes $1,073,750 Federal income tax (221,734) Net income per books $852,016 Depreciation for tax purposes is $136,000 You are not provided enough detailed data to complete a Form 4562 (depreciation) If you solve this problem using Intuit ProConnect, enter the amount of depreciation on line 20 of Form 1120 Balance Sheet Assets January 1, 2019 December 31, 2019 Cash $1,200,000 $1,039,461 Trade notes and accounts receivable 2,062,500 2,147,000 Inventories 2,750,000 3,030,000 Stock investment 1,125,000 1,125,000 State bonds 375,000 375,000 Certificates of deposit 400,000 400,000 Prepaid Federal tax 0 2,266 Buildings and other depreciable assets 5,455,000 5,455,000 Accumulated depreciation (606,000) (712,000) Land 812,500 812,500 Other assets 140,000 128,500 Total assets $13,714,000 $13,802,727 Liabilities and Equity January 1, 2019 December 31, 2019 Accounts payable $2,284,000 $1,840,711 Other current liabilities 175,000 155,000 Mortgages 4,625,000 4,575,000 Capital stock 2,500,000 2,500,000 Retained earnings 4,130,000 4,732,016 Total liabilities and equity $13,714,000 $13,802,727 Required During 2019, Pet Kingdom made estimated tax payments of $56,000 each quarter to the IRS Prepare a Form 1120 for Pet Kingdom for tax year 2019 Complete Pet Kingdom's Schedule M 3 for tax year 2019 Part II Reconciliation of Net Income (Loss) per Income Statement of Includible Corporations With Taxable Income per Return (see instructions) Income (Loss) Items (Attach statements for lines 1 through 12) (a) Income (Loss) per Income Statement (b) Temporary Difference (c) Permanent Difference (d) Income (Loss) per Tax Return 7 U S dividends not eliminated in tax consolidation 43750 43750 13 Interest income (see instructions) 35000 15000 20000 17 Cost of goods sold (see instructions) (2300000) (2300000) 26 Total income (loss) items Combine lines 1 through 25 2221250 0 15000 2236250 27 Total expense deduction items (from Part III, line 39) 621734 30000 28 Other items with no differences 29a Mixed groups, see instructions All others, combine lines 26 through 28 30 Reconciliation totals Combine lines 29a through 29c 852016 1077750 Note Line 30, column (a), must equal Part I, line 11, and column (d) must equal Form 1120, page 1, line 28 Schedule M 3 (Form 1120) (Rev 12 2019) Schedule M 3 (Form 1120) (Rev 12 2019) Page 3 Expense Deduction Items (a) Expense Per Income Statement (b) Temporary Difference (c) Permanent Difference (d) Deduction per Tax Return 1 U S current income tax expense 221734 8 Interest expense (see instructions) 216000 19 Charitable contribution of cash and tangible property 38000 31 Depreciation 106000 30000 136000 33 Corporate owned life insurance premiums 40000 39 Total expense deduction items Combine lines 1 through 38 Enter here and on Part II, line 27, reporting positive amounts as negative and negative amounts as positive 621734 30000 Part III Reconciliation of Net Income (Loss) per Income Statement of Includible Corporations With Taxable Income per ReturnExpense Deduction Items (see instructions)

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I need help with schedule M3 line 13 interest income Part C permanent difference On November 1, 2008, Janet Morton and Kim Wong formed Pet

I need help with schedule M3 line 13 interest income Part C permanent difference

On November 1, 2008, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized as follows:

Pet Kingdom's business address is 1010 Northwest Parkway, Dallas, TX 75225; its telephone number is (214) 555-2211; and its e-mail address is petkingdom@pki.com.
The employer identification number is 11-1111112, and the principal business activity code is 453910.
Janet and Kim each own 50% of the common stock; Janet is president and Kim is vice president of the company. No other class of stock is authorized.
Both Janet and Kim are full-time employees of Pet Kingdom. Janet's Social Security number is 123-45-6788, and Kim's Social Security number is 123-45-6787.
Pet Kingdom is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Pet Kingdom uses the straight-line method of depreciation for book purposes and accelerated depreciation (MACRS) for tax purposes.
During 2019, the corporation distributed cash dividends of $250,000.

Pet Kingdom's financial statements for 2019 are shown below.

Income Statement
Income
Gross sales			$5,750,000
Sales returns and allowances			(200,000)
Net sales			$5,550,000
Cost of goods sold			(2,300,000)
Gross profit			$3,250,000
Dividends received from stock
investments in less-than-20%- owned U.S. corporations			43,750
Interest income:
State bonds		$15,000
Certificates of deposit		20,000	35,000
Total income			$3,328,750
Expenses
Salariesofficers:
Janet Morton	$262,500
Kim Wong	262,500	$525,000
Salariesclerical and sales		725,000
Taxes (state, local, and payroll)		238,000
Repairs and maintenance		140,000
Interest expense:
Loan to purchase state bonds	$9,000
Other business loans	207,000	216,000
Advertising		58,000
Rental expense		109,000
Depreciation*		106,000
Charitable contributions		38,000
Employee benefit programs		60,000
Premiums on term life insurance
policies on lives of Janet Morton and Kim Wong; Pet Kingdom is the designated beneficiary		40,000
Total expenses			(2,255,000)
Net income before taxes			$1,073,750
Federal income tax			(221,734)
Net income per books			$852,016

* Depreciation for tax purposes is $136,000. You are not provided enough detailed data to complete a Form 4562 (depreciation). If you solve this problem using Intuit ProConnect, enter the amount of depreciation on line 20 of Form 1120.

Balance Sheet
Assets	January 1, 2019		December 31, 2019
Cash		$1,200,000		$1,039,461
Trade notes and accounts receivable		2,062,500		2,147,000
Inventories		2,750,000		3,030,000
Stock investment		1,125,000		1,125,000
State bonds		375,000		375,000
Certificates of deposit		400,000		400,000
Prepaid Federal tax		0		2,266
Buildings and other depreciable assets		5,455,000		5,455,000
Accumulated depreciation		(606,000)		(712,000)
Land		812,500		812,500
Other assets		140,000		128,500
Total assets		$13,714,000		$13,802,727

Liabilities and Equity	January 1, 2019		December 31, 2019
Accounts payable		$2,284,000		$1,840,711
Other current liabilities		175,000		155,000
Mortgages		4,625,000		4,575,000
Capital stock		2,500,000		2,500,000
Retained earnings		4,130,000		4,732,016
Total liabilities and equity		$13,714,000		$13,802,727

Required:

During 2019, Pet Kingdom made estimated tax payments of $56,000 each quarter to the IRS. Prepare a Form 1120 for Pet Kingdom for tax year 2019.

Complete Pet Kingdom's Schedule M-3 for tax year 2019.

Part II

Reconciliation of Net Income (Loss) per Income Statement of Includible Corporations With Taxable Income per Return (see instructions)

	Income (Loss) Items (Attach statements for lines 1 through 12)	(a) Income (Loss) per Income Statement	(b) Temporary Difference	(c) Permanent Difference	(d) Income (Loss) per Tax Return
7	U.S. dividends not eliminated in tax consolidation . . . . . . . . . . . . . . . .	43750			43750
13	Interest income (see instructions) . .	35000		-15000	20000
17	Cost of goods sold (see instructions)	(2300000)			(2300000)
26	Total income (loss) items. Combine lines 1 through 25 . . . . .	-2221250	0	-15000	-2236250
27	Total expense/deduction items (from Part III, line 39) . . . . . . . . .	-621734	-30000	?	?
28	Other items with no differences . . .	?			?
29a	Mixed groups, see instructions. All others, combine lines 26 through 28.	?	?	?	?
30	Reconciliation totals. Combine lines 29a through 29c . . . . . . . . .	852016	?	?	1077750
	Note: Line 30, column (a), must equal Part I, line 11, and column (d) must equal Form 1120, page 1, line 28.
Schedule M-3 (Form 1120) (Rev. 12-2019)

Schedule M-3 (Form 1120) (Rev. 12-2019)

Page 3

	Expense/Deduction Items	(a) Expense Per Income Statement	(b) Temporary Difference	(c) Permanent Difference	(d) Deduction per Tax Return
1	U.S. current income tax expense . . . . . . . . . . . .	221734		?
8	Interest expense (see instructions) . . . . . . . . . .	216000		?	?
19	Charitable contribution of cash and tangible property . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38000			?
31	Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . .	106000	30000		136000
33	Corporate owned life insurance premiums . . . . .	40000		?	?
39	Total expense/deduction items. Combine lines 1 through 38. Enter here and on Part II, line 27, reporting positive amounts as negative and negative amounts as positive . . . . . . . . . . . . . .	621734	30000	?	?

Part III

Reconciliation of Net Income (Loss) per Income Statement of Includible Corporations With Taxable Income per ReturnExpense/Deduction Items (see instructions)