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John Parsons (123-45-6781) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111111), a candy company located at 1005 16th street,

John Parsons (123-45-6781) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111111), a candy company located at 1005 16th street, Cut and Shoot, TX 77303. Premium's S election was made on January 15, 2008, its date of inception. The following information was taken from the company's 2014 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 (150,000)

Repairs (206,106)

Depreciation expense (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, 2014 December 31, 2014

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.

Distribution to shareholders $100,000

Beginning balance, Accumulated adjustments account (AAA) 111,148

Using the preceding information, prepare a complete Form 1120S and Schedule K-1s for John Parsons and George Smith, 5607 20th Street, Cut and Shoot, TX 77303. Do not complete the form 4562. If any information is missing, make realistic assumptions.

Prepare Schedule K, M-1, M-2, K-1 (K-1 for John Parsons)

Additional Information

1120S page 1 line 21 ordinary business income 639,574

Schedule L is attached

Schedule K complete to following lines:

1, 4, 12a, 16c, 16d, 17a, 18

K-1 (Dane Henderson) complete K-1, including the following lines:

1, 4, 12, 16c, 16d, 17a

Schedule M-2 - line 8 (a) 715,722 (b) 0 (c ) 0

Lines 3 & 5 (a) have separately stated and nondeductibles

Schedule M-2 line 1: (a) 111,148

Schedule M-1 line 1: 704,574; Line 8: 719,574

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