Note: This problem is for the 2018 tax year.

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, 2010, its date of incorporation. The following information was taken from the company's 2018 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, 2017		December 31, 2017
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	$100,000
Beginning balance, Accumulated adjustments account	$111,148

Required:

Provide the requested information that would be reported on the 2018 Form 1120S and Schedule K-1s for John Parsons and George Smith.

If an answer is zero, enter "0".

Enter all amounts as positive numbers.

If required, round amounts to the nearest dollar.

Make realistic assumptions about any missing data.

Provide the following that would be reported on John Parsons's Schedule K1.

1. Calculate the amount reported as ordinary business income or loss. $

5. Calculate the total amount reported for items affecting shareholder basis. $

Provide the following that would be reported on John Parsons's K-1 Statement.

John Parsons	123-45-6781
K-1 Statement (Sch K-1, Form 1120S)

Line 12 - Deductions

Code A - Cash contributions (50%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

A

Line 16 - Items affecting shareholder basis

Code C - Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

C

Code D - Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

D

Line 17 - Other Information

Provide the following that would be reported on George Smith's Schedule K1.

5. Calculate the total amount reported for items affecting shareholder basis. $

Provide the following that would be reported on George Smith's K-1 Statement.

George Smith	123-45-6782
K-1 Statement (Sch K-1, Form 1120S)

Line 12 - Deductions
A	Code A - Cash contributions (50%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$
Line 16 - Items affecting shareholder basis
C	Code C - Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$
D	Code D - Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$
Line 17 - Other Information
A	Code A - Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $