Olive Corporation is an S corporation which is owned 50 percent by Linda Holiday and 50 percent by Ralph Winston. The corporation is not subject to any special taxes and no estimated tax payments are made. Complete Form 1120S for Olive Corporation and Schedule K-1 for Linda. Assume there were no cash distributions during the year.

The Olive Corporation Income Statement for the Year Ended December 31, 2014
Gross income from operations			$260,000
Qualified dividends received from a 10 percent- owned domestic corporation			20,000
Total gross income			$280,000
Cost of goods sold			(105,000)
Total income			$175,000
Other expenses:
Compensation of officers	$75,000
Salaries and wages	30,000
Bad debts (direct charge-offs)	7,000
Repairs	3,000
Depreciation	10,000
Advertising	5,000
Payroll taxes	10,000
Total other expenses			(140,000)
Net income (before federal income tax expense)			$35,000
The Olive Corporation Balance Sheet as of December 31, 2014
Assets:
Cash	$30,000
Accounts receivable	20,000
Inventory (at cost)	80,000
Equipment	90,000
Less: accumulated depreciation	(10,000)
Total assets			$210,000
Liabilities and owners' equity:
Accounts payable	$10,000
Note payable (due in 10 years)	85,000
Common stock	80,000
Retained earnings	35,000
Total liabilities and owners' equity			$210,000

Note: If required, enter a "loss" as a negative number on the tax form. Do not enter deductions as negative numbers. If an amount box does not require an entry, or the answer is zero, enter "0".