I need to understand how to figure out this return. I am confused with line 21. I think3820800 might be the right answer but Im not sure how others got that.Line 22 should be979,200 according to the professor. Please assist.

PROBLEM 5PARTNERSHIP (FORM 1065) Ryan Ross (111-11-1111), Oscar Oleander (222-22-2222), Clark Carey (333-33-3333), and Kim Kardigan (444-44-4444) are equal members in ROCK the Ages, LLC. ROCK serves as agents and managers for prominent musicians in the Los Angeles area. The LLC's Federal ID number is 55-5555555. It uses the cash basis and the calendar year and began operations on January 1, 2002. Its current address is 6102 Wilshire Boulevard, Suite 2100, Los Angeles, CA 90036. ROCK was the force behind such music icons as Rhiannon and Burgundy 5 and has had a very profitable year. The following information was taken from the LLC's income statement for the current year: Revenues: Fees and commissions $4,800,000 Taxable interest income from bank deposits Tax-exempt interest 1,600 3,200 Net gain on stock sales 4,000 Total revenues $4,808,800 Expenses: Advertising and public relations $ 380,000 Charitable contributions Section 179 expense 28,000 20,000 Employee salaries and wages 1,000,000 Guaranteed payment, Ryan Ross, office manager Guaranteed payment, other members 800,000 600,000 Entertainment, subject to 50% disallowance 200,000 Travel 320,000 Legal and accounting fees Office rentals paid $ 132,000 80,000 Interest expense on operating line of credit Insurance premiums 52,000 Office expense 200,000 Payroll taxes Utilities 54,800 92,000 10,000 Total expenses $3,968,800 During the past couple of years, ROCK has taken advantage of bonus depreciation and 179 deductions and fully remodeled the premises and upgraded its leasehold improvements. This year, ROCK wrapped up its remodel with the purchase of $20,000 of office furniture for which it will claim a 179 deduction. (For simplicity, assume that ROCK uses the same cost recovery methods for both tax and financial purposes.) There is no depreciation adjustment for alternative minimum tax purposes. ROCK invests much of its excess cash in non-dividend-paying growth stocks and tax-exempt securities. During the year, the LLC sold two securities. On June 15, 2013, ROCK purchased 1,000 shares of Tech, Inc. stock for $100,000; it sold those shares on December 15, 2013, for $80,000. On March 15, 2012, ROCK purchased 2,000 shares of BioLabs, Inc. stock for $136,000; it sold those shares for $160,000 on December 15, 2013. These transactions were reported to the IRS on Forms 1099-B; ROCK's basis in these shares was reported. Net income per books is $840,000. The firm's activities do not constitute \"qualified production activities\" for purposes of the 199 deduction. On January 1, 2013, the members' capital accounts equaled $200,000 each. No additional capital contributions were made in 2013. In addition to their guaranteed payments, each member withdrew $250,000 cash during the year. The LLC's balance sheet as of December 31, 2013, is as follows: Beginning Cash $ 444,000 Ending $ ?? Tax-exempt securities 120,000 120,000 Marketable securities 436,000 300,000 Leasehold improvements, furniture, and equipment 960,000 980,000 Accumulated depreciation (960,000) (980,000) Total assets $ $1,000,000 ?? Operating line of credit $ 200,000 $ 160,000 Capital, Ross 200,000 ?? Capital, Oleander 200,000 ?? Capital, Carey Capital, Kardigan Total liabilities and capital 200,000 ?? 200,000 ?? $1,000,000 $ ?? Assume that all debt is shared equally by the members. Each member has personally guaranteed the debt of the LLC. The business code for \"Agents and Managers for Artists, Athletes, Entertainers, and Other Public Figures\" is 711410. The LLC's Form 1065 was prepared by Ryan Ross and sent to the Ogden, UT IRS Service Center. All members are active in LLC operations. a. Prepare Form 1065, pages 1, 4, and 5, for ROCK the Ages, LLC. b. If you are using tax return preparation software, prepare Form 4562 and Schedule D. c. Prepare Schedule K-1 for Ryan Ross, 15520 W. Earlson Street, Pacific Palisades, CA 90272. ACTG068A HW#4 workpaper Form 1065 Revenues: Sales Revenues Tax Exempt Interest Income Interest Income LT Capital Gain (Loss) ST Capital Gain (Loss) Total revenues Cost of Goods Sold Beginning Inventory Material Purchases Labor Additional Sec. 263 A costs Other Costs: Various Items Book Depreciation Ending Inventory Cost of Goods Sold Other Costs Salaries and wages Taxes and Licenses Charitable Contributions Guaranteed Payments Interest Expense Books For Year Ended 12/31/XXXX 4,800,000 3,200 1,600 book/tax differences permanent temporary Tax Return 4,800,000 1,600 4,801,600 (3,200) 4,804,800 - - - - - 1,000,000 1,000,000 - Meals and Entertainment (subject to 50% limitation) Travel Expenses Employee Benefit Programs 200,000 (100,000) 100,000 - Insurance (including key employee life insurance of $100,000 Legal and Professional Fees Office Expenses Sales and Promotional Expenses Utilities - Warranty Reserve (increase to reserves; not fixed and determinable) Total Other Costs 1,200,000 (100,000) - 1,100,000 Net Income per Books and GAAP-based audited Financial Statements 3,604,800 100,000 - 3,701,600 s/b = Sch. M-1 Line 1 (A) Download and print Instructions for Form 1065 and Schedule K-1 of 1065 - available at the IRS website. Step 1. Step 2. Step 3. Step 4. Step 5. Step 6. Step 7. Input all items of income and expenses missing Identify book/tax differences and input them in a proper column. Identify income and expenses that are "separately reported" items. Input them in col K Input Ordinary income and expenses on page 1 of 1065 - these s/b your numbers in col M COGS - N/A Input "separately stated" items of income and expenses on Sch K - numbers from col K above Be sure to check your checkpoint on line 1 pg. 5 Step 8. Step 9. Step 10 Step 11 Step 12 Input Schedule L - keep in mind schedule L is on GAAP basis - so you have all numbers you need on page E-12 Complete Sch. M-2 - this schedule is on GAAP (book basis) - line 9 s/b = line 21 col (d) of Sch L Fill out Schedule M-1 on pg 5 of 1065 Fill out Schedules B on pg 2-3 of 1065 Prepare Sch K-1 for Ryan Ross Separately Stated items Sch. K 1,600 1,600 - Ordinary Income Items page 1 of 1065 4,800,000 4,800,000 1,000,000 100,000 - - - 1,100,000 check point 1,600 3,700,000 3,701,600 Line 22 pg 1 of Line 1 pg 5 1065 Analysis of Net Income (Loss) S/B = (A) and ou need on page E-12 Sch. M-1 line 9