Note: This problem is for the 2020 tax year. 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 Gross sales receipts Beginning inventory Direct labor Direct materials purchased Direct other costs Ending inventory Salaries and wages $ 100,000 2,410,000 9,607 (203,102) (278,143) (249,356) 3,467 (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 Book income A comparative balance sheet appears below. (59,899) 704,574 January 1, 2020 December 31, 2020 Cash Accounts receivable Inventories Prepaid expenses $ 47,840 $ ? 93,100 123,104 9,607 3,467 8,333 17,582 Building and equipment 138,203 185,348 Accumulated depreciation (84,235) (?) Land 2,000 Total assets Accounts payable $ 42,500 Notes payable (less than 1 year) $214,848 4,500 2,000 $844,422 $ 72,300 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): Beginning balance, Accumulated adjustments account: Ordinary business income for QBI: W-2 wages for QBI: $100,000 111,148 639,574 795,205 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. If an amount box does not require an entry or the answer is zero, enter "0". Enter all amounts as positive numbers, unless otherwise instructed. If required, round amounts to the nearest dollar. Make realistic assumptions about any missing data. Center where corporation fired return File II Information About the Shareholder areholder's identifying number 3-45-6781 areholder's name, address, city, state, and ZIP code hn Parsons 07 20th Street t and Shoot, TX 77303 rrent year allocation percentage... 70 % areholder's number of shares inning of tax year 6 Royalties 7 Net short-term capital gain (loss) 8a Net long-term capital gain (loss) 8b Collectibles (28%) gain (loss) 8c Unrecaptured section 1250 gain 9 Net section 1231 gain (loss) nd of tax year. ans from shareholder eginning of tax year. nd of tax year. rwork Reduction Act Notice, see the Instructions for Form 1120-S. der 1 10 Other income (loss) 15 Alternative minimum tax (AMT) items 11 Section 179 deduction 16 Items affecting shareholder basis C 12 Other deductions A 14,000 D 70,000 17 Other information A AC V* STMT 70,000 18 More than one activity for at-risk purposes* 19 More than one activity for passive activity purposes* *See attached statement for additional information. www.irs.gov/Form1120S Schedule K-1 (Form 1120-S) 2020 'poration's name, address, city, state, and ZIP code emium, Inc. 05 16th Street and Shoot, TX 77303 S Center where corporation filed return ile II Information About the Shareholder areholder's identifying number 3-45-6782 areholder's name, address, city, state, and ZIP code orge Smith 20th Street nd Shoot, TX 77303 rent year allocation percentage... 30 % areholder's number of shares eginning of tax year.. 30,000 5a Ordinary dividends 5b Qualified dividends 14 Foreign transactions 6 Royalties 7 Net short-term capital gain (loss) 8a Net long-term capital gain (loss) 8b Collectibles (28%) gain (loss) 8c Unrecaptured section 1250 gain 9 Net section 1231 gain (loss) nd of tax year. ns from shareholder eginning of tax year nd of tax year. $ 10 Other income (loss) 15 Alternative minimum tax (AMT) items 11 Section 179 deduction 16 Items affecting shareholder basis C 12 Other deductions A 6,000 D 30,000 17 Other information A AC V* STMT 30,000 1x