Jane Collier, James Taye, and Steve Allwine each own one-third of the common stock of Tasty Treats and Beverages. The corporation was incorporated on April 3, 2004. It has only one class of stock outstanding and operates as a C corporation for tax purposes. Tasty Treats and Beverages caters kid-friendly social events.

• Located at 1215 Blue Horizon, Dallas, TX 12234.
• Employer Identification Number is 12-34567890.
• Business activity is catering food. Its business activity code is 722300.
• The shareholders also work as officers for the corporation as follows:
  • Jane is the chief executive officer and president (Social Security number 242-62-5786).
  • James is the executive vice president and chief operating officer (Social Security number 563-58-8923).
  • Steve is the vice president of finance (Social Security number 575-58-1572).
• All officers devote 100% of their time to the business
• All officers are U.S. citizens.
• Use the accrual method of accounting and have a calendar year-end.
• Four equal estimated tax payments of $28,000 each quarter. Its tax liability last year was $85,000.
• If it has overpaid its federal tax liability, the corporation would like to receive a refund.
• Dividend paid of $20,000 to its shareholders on October 1. The Corporation had ample earnings and profits (E&P) to absorb the distribution.

Financial Statements

Tasty Treats and Beverages, Inc.
Income Statement
For year ended December 31, 2013
Revenue from sales		1,500,000
Sales returns and allowances		(25,000)
Cost of goods sold		(325,000)
Gross profit from operations		1,150,000
Other Income:
Capital loss		(7,500)
Dividend income		15,000
Interest income		12,000
Gross income		1,169,500
Expenses:
Compensation		(750,000)
Depreciation		(12,000)
Bad debt expense		(7,800)
Meals and entertainment		(3,000)
Maintenance		(2,500)
Property taxes		(10,000)
State income taxes		(30,000)
Other taxes		(11,000)
Rent		(28,000)
Interest		(7,300)
Advertising		(6,200)
Professional services		(5,000)
Employee benefits		(8,000)
Supplies		(2,500)
Other expenses		(1,750)
Total expenses		(885,050)
Income before taxes		284,450
Federal income tax expense		96,713
Net income after taxes		187,737

• Tasty Treats and Beverages, Inc.
  Balance Sheet
  December 31, 2013
  ASSETS		January 2013		December 2013
  Cash		175,000		190,000
  Accounts Receivable		63,000		54,000
  Allowance for doubtful accounts		(8,000)		(7,000)
  Inventory		225,000		275,000
  US government bonds		30,000		25,000
  State and local bonds		50,000		50,000
  Investments in stock		325,000		335,000
  Fixed assets		475,000		485,000
  Accumulated depreciation		(198,000)		(215,000)
  Other assets		11,000		12,000
  Total assets		1,148,000		1,204,000
  Liabilities and Stockholder's Equity
  Accounts payable		225,000		200,000
  Other current liabilities		135,000		55,000
  Other liabilities		75,000		68,263
  Capital stock		250,000		250,000
  Retained earnings		463,000		630,737
  Total liabilities and stockholder's equity		1,148,000		1,204,000

  Additional Information

  • Inventory-related purchases during 2013 were $175,000. It values its inventory based on cost using the FIFO inventory cost flow method. Assume the rules of