Note: This problem is for the 2018 tax year. On February 12, 2005, Nancy Trout and Delores Lake formed Kingfisher Corporation to sell fishing tackle. Pertinent information regarding Kingfisher is summarized as follows: Kingfisher's business address is 1717 Main Street, Ely, MN 55731; its telephone number is (218) 555-2211; and its e-mail address is kingfisher@kf.com. The employer identification number is 11-1111113, and the principal business activity code is 451110. Nancy owns 50% of the common stock and is president of the company, and Delores owns 50% of the common stock and is vice president of the company. No other class of stock is authorized. Both Nancy and Delores are full-time employees of Kingfisher. Nancy's Social Security number is 123-45-6788, and Delores's Social Security number is 123-45-6787. Kingfisher is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Kingfisher uses the straight-line method of deprecation for book purposes and accelerated depreciation (MACRS) for tax purposes. During 2018, the corporation distributed cash dividends of $80,000. Kingfisher's financial statements for 2018 are shown below and on the next page. Income Statement Income Gross sales Sales returns and allowances Net sales Cost of goods sold Gross profit Dividends received from stock investments in less-than-20%- $2,408,000 (80,000) $2,328,000 (920,000) $1,408,000 Income Statement Income $2,408,000 (80,000) $2,328,000 (920,000) $1,408,000 Gross sales Sales returns and allowances Net sales Cost of goods sold Gross profit Dividends received from stock investments in less-than-20%- owned U.S. corporations Interest income: State bonds Certificates of deposit Total income Expenses 12,000 $14,000 10,000 24,000 $1,444,000 $160,000 160,000 Salaries-officers: Nancy Trout Delores Lake Salaries-clerical and sales Taxes (state, local, and payroll) Repairs and maintenance Interest expense: Business loans $320,000 290,000 85,000 56,000 $12,000 $14,000 10,000 State bonds Certificates of deposit Total income Expenses 24,000 $1,444,000 $160,000 160,000 $320,000 290,000 85,000 56,000 $12,000 8,000 Salaries-officers: Nancy Trout Delores Lake Salaries-clerical and sales Taxes (state, local, and payroll) Repairs and maintenance Interest expense: Business loans Loan to purchase state bonds Advertising Rental expense Depreciation* Charitable contributions Employee benefit programs Premiums on term life insurance policies on lives of Janet Morton and Kim Wong; Pet Kingdom is the designated beneficiary Total expenses 20,000 6,000 68,000 40,000 15,000 24,000 16,000 (940,000) 16,000 Kim Wong; Pet Kingdom is the designated beneficiary Total expenses Net income before taxes Federal income tax Net income per books (940,000) $504,000 (106,680) $397,320 * You are not provided enough detailed information to complete a Form 4562 (depreciation). If you solve this problem using Intuit ProConnect, enter the amount of deprecation on line 20 of Form 1120. December 31, 2018 Balance Sheet January 1, 2018 $380,000 308,400 900,000 160,000 -0- Assets Cash Trade notes and accounts receivable Inventories State bonds Federal income tax refund Certificates of deposit Stock investments Buildings and other depreciable assets Accumulated depreciation Land Other assets 140,000 300,000 240,000 (88,000) 20,000 3,600 $337,300 480,280 1,012,000 160,000 1,320 140,000 300,000 240,000 (128,800) 20,000 2,000 Assets Cash Trade notes and accounts receivable Inventories State bonds Federal income tax refund Certificates of deposit Stock investments Buildings and other depreciable assets Accumulated depreciation Land Other assets Balance Sheet January 1, 2018 $380,000 308,400 900,000 160,000 -0- 140,000 300,000 240,000 (88,000) 20,000 3,600 $2,363,200 December 31, 2018 $337,300 480,280 1,012,000 160,000 1,320 140,000 300,000 240,000 (128,800) 20,000 2,000 Total assets $2,564,100 Liabilities and Equity January 1, 2018 December 31, 2018 Accounts payable Other current liabilities Mortgages Capital stock Retained earnings Total liabilities and equity $300,000 80,300 210,000 500,000 1,272,900 $2,363,200 $233,880 40,000 200,000 500,000 1,590,220 $2,564,100 Required: Stock investments Buildings and other depreciable assets Accumulated depreciation Land Other assets Total assets 300,000 240,000 (88,000) 20,000 3,600 300,000 240,000 (128,800) 20,000 2,000 $2,564,100 $2,363,200 December 31, 2018 Liabilities and Equity Accounts payable Other current liabilities Mortgages Capital stock Retained earnings Total liabilities and equity January 1, 2018 $300,000 80,300 210,000 500,000 1,272,900 $2,363,200 $233,880 40,000 200,000 500,000 1,590,220 $2,564,100 Required: During 2018, Kingfisher made estimated tax payments of $27,000 each quarter to the IRS. Prepare a Form 1120 for Kingfisher for tax year 2018. If an amount box does not require an entry or the answer is zero, enter "O". Enter all amounts as positive numbers, unless otherwise instructed. If required, round amounts to the nearest dollar. Make realistic assumptions about any missing data. Assets (d) (b) 380,000 1 Cash .............. 2a Trade notes and accounts receivable ....... 308,400 480,280 b Less allowance for bad debts. 308,400 480, 280 3 Inventories ....... 900,000 1,012,000 4 U.S. government obligations ............ 5 Tax-exempt securities (see instructions) .... 160,000 160,000 6 other current assets (attach statement) .... 440,000 7 Loans to shareholders. 8 9 Mortgage and real estate loans ......... Other investments (attach statement) ..... 10a Buildings and other depreciable assets ..... 240,000 240,000 b Less accumulated depreciation 88,800 151,200 128,800 111,200 11a Depletable assets .............. b Less accumulated depletion ........ 12 Land (net of any amortization) ..... 12 Totanaiblo accate amortizable anbe b Less accumulated amortization ........... 14 Other assets (attach statement) .......... 15 Total assets ........ 2,363,200 2,564,100 Liabilities and Shareholders' Equity 16 Accounts payable .. 300,000 17 Mortgages, notes, bonds payable in less than 1 year 18 Other current liabilities (attach statement) .. Loans from shareholders ........ 19 20 21 22 Mortgages, notes, bonds payable in 1 year or more Other liabilities (attach statement) ........ Capital stock: a Preferred stock ........ b Common stock ........ 500,000 500,000 500,000 500,000 23 Additional paid-in capital .............. 1,272,900 24 Retained earnings-Appropriated (attach statement) 25 Retained earnings-Unappropriated. 26 Adjustments to shareholders' equity (attach statement) 27 Less cost of treasury stock .............. Note: This problem is for the 2018 tax year. On February 12, 2005, Nancy Trout and Delores Lake formed Kingfisher Corporation to sell fishing tackle. Pertinent information regarding Kingfisher is summarized as follows: Kingfisher's business address is 1717 Main Street, Ely, MN 55731; its telephone number is (218) 555-2211; and its e-mail address is kingfisher@kf.com. The employer identification number is 11-1111113, and the principal business activity code is 451110. Nancy owns 50% of the common stock and is president of the company, and Delores owns 50% of the common stock and is vice president of the company. No other class of stock is authorized. Both Nancy and Delores are full-time employees of Kingfisher. Nancy's Social Security number is 123-45-6788, and Delores's Social Security number is 123-45-6787. Kingfisher is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Kingfisher uses the straight-line method of deprecation for book purposes and accelerated depreciation (MACRS) for tax purposes. During 2018, the corporation distributed cash dividends of $80,000. Kingfisher's financial statements for 2018 are shown below and on the next page. Income Statement Income Gross sales Sales returns and allowances Net sales Cost of goods sold Gross profit Dividends received from stock investments in less-than-20%- $2,408,000 (80,000) $2,328,000 (920,000) $1,408,000 Income Statement Income $2,408,000 (80,000) $2,328,000 (920,000) $1,408,000 Gross sales Sales returns and allowances Net sales Cost of goods sold Gross profit Dividends received from stock investments in less-than-20%- owned U.S. corporations Interest income: State bonds Certificates of deposit Total income Expenses 12,000 $14,000 10,000 24,000 $1,444,000 $160,000 160,000 Salaries-officers: Nancy Trout Delores Lake Salaries-clerical and sales Taxes (state, local, and payroll) Repairs and maintenance Interest expense: Business loans $320,000 290,000 85,000 56,000 $12,000 $14,000 10,000 State bonds Certificates of deposit Total income Expenses 24,000 $1,444,000 $160,000 160,000 $320,000 290,000 85,000 56,000 $12,000 8,000 Salaries-officers: Nancy Trout Delores Lake Salaries-clerical and sales Taxes (state, local, and payroll) Repairs and maintenance Interest expense: Business loans Loan to purchase state bonds Advertising Rental expense Depreciation* Charitable contributions Employee benefit programs Premiums on term life insurance policies on lives of Janet Morton and Kim Wong; Pet Kingdom is the designated beneficiary Total expenses 20,000 6,000 68,000 40,000 15,000 24,000 16,000 (940,000) 16,000 Kim Wong; Pet Kingdom is the designated beneficiary Total expenses Net income before taxes Federal income tax Net income per books (940,000) $504,000 (106,680) $397,320 * You are not provided enough detailed information to complete a Form 4562 (depreciation). If you solve this problem using Intuit ProConnect, enter the amount of deprecation on line 20 of Form 1120. December 31, 2018 Balance Sheet January 1, 2018 $380,000 308,400 900,000 160,000 -0- Assets Cash Trade notes and accounts receivable Inventories State bonds Federal income tax refund Certificates of deposit Stock investments Buildings and other depreciable assets Accumulated depreciation Land Other assets 140,000 300,000 240,000 (88,000) 20,000 3,600 $337,300 480,280 1,012,000 160,000 1,320 140,000 300,000 240,000 (128,800) 20,000 2,000 Assets Cash Trade notes and accounts receivable Inventories State bonds Federal income tax refund Certificates of deposit Stock investments Buildings and other depreciable assets Accumulated depreciation Land Other assets Balance Sheet January 1, 2018 $380,000 308,400 900,000 160,000 -0- 140,000 300,000 240,000 (88,000) 20,000 3,600 $2,363,200 December 31, 2018 $337,300 480,280 1,012,000 160,000 1,320 140,000 300,000 240,000 (128,800) 20,000 2,000 Total assets $2,564,100 Liabilities and Equity January 1, 2018 December 31, 2018 Accounts payable Other current liabilities Mortgages Capital stock Retained earnings Total liabilities and equity $300,000 80,300 210,000 500,000 1,272,900 $2,363,200 $233,880 40,000 200,000 500,000 1,590,220 $2,564,100 Required: Stock investments Buildings and other depreciable assets Accumulated depreciation Land Other assets Total assets 300,000 240,000 (88,000) 20,000 3,600 300,000 240,000 (128,800) 20,000 2,000 $2,564,100 $2,363,200 December 31, 2018 Liabilities and Equity Accounts payable Other current liabilities Mortgages Capital stock Retained earnings Total liabilities and equity January 1, 2018 $300,000 80,300 210,000 500,000 1,272,900 $2,363,200 $233,880 40,000 200,000 500,000 1,590,220 $2,564,100 Required: During 2018, Kingfisher made estimated tax payments of $27,000 each quarter to the IRS. Prepare a Form 1120 for Kingfisher for tax year 2018. If an amount box does not require an entry or the answer is zero, enter "O". Enter all amounts as positive numbers, unless otherwise instructed. If required, round amounts to the nearest dollar. Make realistic assumptions about any missing data. Assets (d) (b) 380,000 1 Cash .............. 2a Trade notes and accounts receivable ....... 308,400 480,280 b Less allowance for bad debts. 308,400 480, 280 3 Inventories ....... 900,000 1,012,000 4 U.S. government obligations ............ 5 Tax-exempt securities (see instructions) .... 160,000 160,000 6 other current assets (attach statement) .... 440,000 7 Loans to shareholders. 8 9 Mortgage and real estate loans ......... Other investments (attach statement) ..... 10a Buildings and other depreciable assets ..... 240,000 240,000 b Less accumulated depreciation 88,800 151,200 128,800 111,200 11a Depletable assets .............. b Less accumulated depletion ........ 12 Land (net of any amortization) ..... 12 Totanaiblo accate amortizable anbe b Less accumulated amortization ........... 14 Other assets (attach statement) .......... 15 Total assets ........ 2,363,200 2,564,100 Liabilities and Shareholders' Equity 16 Accounts payable .. 300,000 17 Mortgages, notes, bonds payable in less than 1 year 18 Other current liabilities (attach statement) .. Loans from shareholders ........ 19 20 21 22 Mortgages, notes, bonds payable in 1 year or more Other liabilities (attach statement) ........ Capital stock: a Preferred stock ........ b Common stock ........ 500,000 500,000 500,000 500,000 23 Additional paid-in capital .............. 1,272,900 24 Retained earnings-Appropriated (attach statement) 25 Retained earnings-Unappropriated. 26 Adjustments to shareholders' equity (attach statement) 27 Less cost of treasury stock