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	$ 100,000
Gross sales receipts	2,410,000
Beginning inventory	9,607
Direct labor	(203,102)
Direct materials purchased	(278,143)
Direct other costs	(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	(59,899)
Book income	704,574

A comparative balance sheet appears below.

	January 1, 2020		December 31, 2020
Cash	$ 47,840		$ ?
Accounts receivable	93,100		123,104
Inventories	9,607		3,467
Prepaid expenses	8,333		17,582
Building and equipment	138,203		185,348
Accumulated depreciation	(84,235)		(?)
Land	2,000		2,000
Total assets	$214,848		$844,422
Accounts payable	$ 42,500		$ 72,300
Notes payable (less than 1 year)	4,500		2,100
Notes payable (more than 1 year)	26,700		24,300
Capital stock	30,000		30,000
Retained earnings	$111,148		?
Total liabilities and capital	$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

Required:

Prepare Premium's Form 1120S, Additional Information - Continuation Statement, and Schedule K-1s for John Parsons and George Smith, 5607 20th Street, Cut and Shoot, TX 77303.

Form 1120-S 1a Gross receipts or sales .. 1a b Returns and allowances 1b c Balance. Subtract line 1b from line 1a 1c 2 Cost of goods sold (attach Form 1125-A) 2 mzo nz- 3 Gross profit. Subtract line 2 from line 1c.. 3 4 4 4 Net gain (loss) from Form 4797, line 17 (attach Form 4797) Other income (loss) (see instrs att statement) 5 5 6 6 Total income (loss). Add lines 3 through 5 A 6 7 Compensation of officers (see instructions - attach Form 1125-E) 7 8 Salaries and wages (less employment credits). 8 9 Repairs and maintenance 9 10 Bad debts 10 11 Rents 11 12 Taxes and licenses. 12 13 Interest (see instructions) 13 OWODU -ozn www -znan 14 Depreciation not claimed on Form 1125-A or elsewhere on return (attach Form 4562) 14 15 Depletion (Do not deduct oil and gas depletion.) . . 15 16 Advertising ..... 16 10 17 Pension, profit-sharing, etc., plans. 17 18 Employee benefit programs 18 19 Other deductions (attach statement) 19