Note: This problem is for the 2020 tax year.

On November 1, 2009, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized as follows:

• Pet Kingdom's business address is 1010 Northwest Parkway, Dallas, TX 75225; its telephone number is (214) 555-2211; and its e-mail address is petkingdom@pki.com.
• The employer identification number is 11-1111112, and the principal business activity code is 453910.
• Janet and Kim each own 50% of the common stock; Janet is president and Kim is vice president of the company. No other class of stock is authorized.
• Both Janet and Kim are full-time employees of Pet Kingdom. Janet's Social Security number is 123-45-6788, and Kim's Social Security number is 123-45-6787.
• Pet Kingdom is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Pet Kingdom uses the straight-line method of depreciation for book purposes and accelerated depreciation (MACRS) for tax purposes.
• During 2020, the corporation distributed cash dividends of $250,000.

Pet Kingdom's financial statements for 2020 are shown below.

Income Statement
Income
Gross sales					$5,750,000
Sales returns and allowances					(200,000)
Net sales					$5,550,000
Cost of goods sold					(2,300,000)
Gross profit					$3,250,000
Dividends received from stock
investments in less-than-20%- owned U.S. corporations					43,750
Interest income:
State bonds			$15,000
Certificates of deposit			20,000		35,000
Total income					$3,328,750
Expenses
Salariesofficers:
Janet Morton	$262,500
Kim Wong	262,500		$525,000
Salariesclerical and sales			725,000
Taxes (state, local, and payroll)			238,000
Repairs and maintenance			140,000
Interest expense:
Loan to purchase state bonds	$9,000
Other business loans	207,000		216,000
Advertising			58,000
Rental expense			109,000
Depreciation*			106,000
Charitable contributions (cash)			38,000
Employee benefit programs			60,000
Premiums on term life insurance
policies on lives of Janet Morton and Kim Wong; Pet Kingdom is the designated beneficiary			40,000
Total expenses					(2,255,000)
Net income before taxes					$1,073,750
Federal income tax					(221,734)
Net income per books					$852,016
* Depreciation for tax purposes is $136,000. You are not provided enough detailed data to complete a Form 4562 (depreciation). If you solve this problem using Intuit ProConnect, enter the amount of depreciation on line 20 of Form 1120.

Balance Sheet
Assets	January 1, 2020				December 31, 2020
Cash		$1,200,000				$1,039,461
Trade notes and accounts receivable		2,062,500				2,147,000
Inventories		2,750,000				3,030,000
Stock investment		1,125,000				1,125,000
State bonds		375,000				375,000
Certificates of deposit		400,000				400,000
Prepaid Federal tax		0				2,266
Buildings and other depreciable assets		5,455,000				5,455,000
Accumulated depreciation		(606,000)				(712,000)
Land		812,500				812,500
Other assets		140,000				128,500
Total assets		$13,714,000				$13,802,727
Liabilities and Equity	January 1, 2020				December 31, 2020
Accounts payable		$2,284,000				$1,840,711
Other current liabilities		175,000				155,000
Mortgages		4,625,000				4,575,000
Capital stock		2,500,000				2,500,000
Retained earnings		4,130,000				4,732,016
Total liabilities and equity		$13,714,000				$13,802,727

Required:

During 2020, Pet Kingdom made estimated tax payments of $56,000 each quarter to the IRS. Prepare Pet Kingdom's corporate tax return for tax year 2020 using Form 1120 (and any other appropriate forms and schedules).

• 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

4a Worldwide consolidated net income (loss) from income statement source identified in Part I, line 1 .... 4a b Indicate accounting standard used for line 4a (see instructions): (1) GAAP (2) IFRS (3) Statutory (4) Tax-Basis (5) Other (specify) 5a 5a b 5b Net income from nonincludible foreign entities (attach statement). Net loss from nonincludible foreign entities (attach statement and enter as a positive amount) Net income from nonincludible U.S. entities (attach statement) Net loss from nonincludible U.S. entities (attach statement and enter as a positive amount) b 6b 7a Net income (loss) of other includible foreign disregarded entities (attach statement) 7a 7b 7c b Net income (loss) of other includible U.S. disregarded entities (attach statement) Net income (loss) of other includible entities (attach statement) 8 Adjustment to eliminations of transactions between includible entities and nonincludible entities (attach statement).. 9 Adjustment to reconcile income statement period to tax year (attach statement) 10 a Intercompany dividend adjustments to reconcile to line 11 (attach statement) 8 9 10a 10b b Other statutory accounting adjustments to reconcile to line 11 (attach statement) c Other adjustments to reconcile to amount on line 11 (attach statement) 100 11 Net income (loss) per income statement of includible corporations. Combine lines 4 through 10... 11 Note: Part I, line 11, must equal Part II, line 30, column (a), or Schedule M-1, line 1 (see instructions). 12 Enter the total amount (not just the corporation's share) of the assets and liabilities of all entities included or removed on the following lines. Total Assets Total Liabilities a Included on Part I, line 4 b Removed on Part I, line 5 c Removed on Part I, line 6 d Included on Part I, line 7. BAA For Paperwork Reduction Act Notice, see the Instructions for Form 1120. Schedule M-3 (Form 1120) 2020 (Rev. 12- 2019