INSTRUCTIONS: Please use the information below to complete the Form 1120 and the Schedule G for Form 1120. Blank forms can be found on the Hands-On Assignment Page or Doc Sharing. If you have a tax-software package please feel free to use the package but be aware that I will not be able to answer specific questions about the software package. GENERAL COMPANY INFORMATION Margaret Brown and Joel Lee each own 50% of Designs Inc. with no other class of stock is authorized. On June 6, 2009, they formed to provide design services. Designs Inc business address is 2134 Merry Lane, Las Cruces, NM 088011. The telephone number is (575) 541-1122 and the e-mail address is designsinc@cdi.com. Employer identification number is 11-1111111. Margaret is the president of the company and Joel is the vice-president. Margaret and Joel are the only full-time designers employed by Designs, Inc. and they perform all of the design services of the corporation. Margaret?s Social Security number is 123-45-6789 and Joel?s Social Security number is 555-48-9898. Designs, Inc. is a cash method, calendar year taxpayer. Designs, Inc. uses the straight-line method of depreciation for both book and tax purposes. (You are not provided enough detailed data to complete a Form 4562 (depreciation). Enter the amount of depreciation on line 20 of Form 1120.) The corporation does not maintain any inventory. During the year, the corporation distributed cash dividends of $10,000. The domestic production activities deduction (DPAD) for the year is $947. You are not provided enough detailed data to complete a Form 8903 (domestic production activities deduction). Enter the amount of the DPAD on line 25 of Form 1120. During the year, Designs, Inc. made estimated tax payments of $1,500 each quarter to the IRS.

INSTRUCTIONS: Completing Form 1120 Please use the information below to complete the Form 1120 and the Schedule G for Form 1120. Blank forms can be found on the HandsOn Assignment Page or Doc Sharing. If you have a taxsoftware package please feel free to use the package but be aware that I will not be able to answer specific questions about the software package. GENERAL COMPANY INFORMATION Margaret Brown and Joel Lee each own 50% of Designs Inc. with no other class of stock is authorized. On June 6, 2009, they formed to provide design services. Designs Inc business address is 2134 Merry Lane, Las Cruces, NM 088011. The telephone number is (575) 5411122 and the email address is designsinc@cdi.com. Employer identification number is 111111111. Margaret is the president of the company and Joel is the vicepresident. Margaret and Joel are the only fulltime designers employed by Designs, Inc. and they perform all of the design services of the corporation. Margaret's Social Security number is 123456789 and Joel's Social Security number is 555489898. Designs, Inc. is a cash method, calendar year taxpayer. Designs, Inc. uses the straight line method of depreciation for both book and tax purposes. (You are not provided enough detailed data to complete a Form 4562 (depreciation). Enter the amount of depreciation on line 20 of Form 1120.) The corporation does not maintain any inventory. During the year, the corporation distributed cash dividends of $10,000. The domestic production activities deduction (DPAD) for the year is $947. You are not provided enough detailed data to complete a Form 8903 (domestic production activities deduction). Enter the amount of the DPAD on line 25 of Form 1120. During the year, Designs, Inc. made estimated tax payments of $1,500 each quarter to the IRS. Designs, Inc. Income Statement Income: Design fees .................................................................................................... $739,000 Interest income (certificates of deposit)........................................................2,700 Total Income.................................................................................................. $741,700 Expenses: Salariesofficers: Margaret Brown................................$190,000 Joel Lee.................................................190,000................$380,000 Salariesclerical..........................................................................61,000 Taxes: Property..................................................26,810 Payroll......................................................23,280 State Income...........................................3,140 Other miscellaneous...............................2,390...................55,620 Repairs and maintenance.......................................................16,340 Meals and entertainment...........................................................9,800 Travel..............................................................................................5,600 Charitable contributions..............................................................1,200 Interest expense on business loans......................................31,100 Advertising...................................................................................17,650 Rental expense.............................................................................9,270 Depreciation................................................................................35,910 Contributions to pension plans...............................................31,000 Employee benefit programs....................................................21,170 Accounting service....................................................................13,790 Dues and subscriptions..............................................................5,100 Insurance....................................................................................17,750 Legal and professional services............................................11,000 Miscellaneous...............................................................................4,360 Telephone.....................................................................................3,160 Total expenses............................................................................................. (730,820) Net income before taxes...........................................................................$ 10,880 Federal income tax.......................................................................................... (5,192) Net income per books................................................................................$ 5,688 Designs, Inc. Balance Sheet ssets A January 1, 2010 December 31, 2010 Cash..................................................$35,610............................$42,580 Accounts Receivable.......................45,100...............................43,300 Certificates of deposit...................134,000............................143,000 Depreciable assets.........................210,922............................221,488 Accumulated depreciation...........(47,520)...........................(83,430) Land....................................................42,000..............................42,000 Other assets........................................3,638................................2,490 Total Assets..............................$ 423,750........................$ 411,428 ..........................................................======........................====== Liabilities and Equity January 1, 2010 December 31, 2010 Accounts payable......................$ 26,550.........................$ 27,497 Other current liabilities..................15,110................................17,853 Mortgages......................................126,000..............................114,300 Capital stock..................................200,000...............................200,000 Retained earnings..........................56,090..................................51,778 Total Liabilities and Equity..$ 423,750..........................$ 411,428 ........................................................======........................=======