On August 1, 2006, Janet Weiss and Brad Masters formed Pets R Us, Inc. to sell high-end pet supplies. Pertinent Information is given below: Pets R Us business address is 2929 N. Carrolton Avenue, New Orleans, LA 70119, its phone number is (504) 555-2211 and its e-mail address is www.pru@cox.net The employer ID number is 11-11111111, and the principal business activity code is 453910. Brad and Janet each own 50% of the common stock; Janet is president and Brad is vice-president. No other class of stock is authorized. Both of them are full-time employees of the business. Janets social security number is 123-45-6789 and Brads is 987-65-4321. The business is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. They use the straight-line method of depreciation for book purposes; they use MACRS for tax. In 2014, the corporation distributed $250,000 in cash dividends. During 2014, the business made estimated quarterly federal income tax payments of $90,000. Required: Given the above information and the information below, prepare the form 1120 for Pets R Us for 2014.

Pets R Us

Income Statement

12/31/14

Income

Gross sales

$ 5,750,000.00

Sales Returns and allowances

$ (200,000.00)

Net Sales

$ 5,550,000.00

Cost of Goods Sold

$ (2,300,000.00)

Gross Profit

$ 3,250,000.00

Dividends Received (Note 1)

$ 43,750.00

Interest Income

State Bonds

$ 15,000.00

Certificates of Deposit

$ 20,000.00

$ 35,000.00

Total Income

$ 3,328,750.00

Expenses

Salary - Officers

Janet Weiss

$ 262,500.00

Brad Majors

$ 262,500.00

$ 525,000.00

Salaries - Clerical and sales

$ 725,000.00

Taxes - State, Local and Payroll

$ 238,000.00

Repairs and Maintenance

$ 140,000.00

Interest Expense

Loans to Purchase State bonds

$ 9,000.00

Other business loans

$ 207,000.00

$ 216,000.00

Advertising

$ 58,000.00

Rental Expense

$ 109,000.00

Depreciation (Note 2)

$ 106,000.00

Charitable contributions

$ 38,000.00

Employee Benefit programs

$ 60,000.00

Premiums on Key-man life Insurance

$ 40,000.00

Total Expenses

$ 2,255,000.00

Net Income before Taxes

$ 1,073,750.00

Federal Income Tax

$ (356,023.00)

Net Income per books

$ 717,727.00

Note 1: These dividends were received from less-than-20% owned stock in US Corporations

Note 2: Depreciation for tax purposes is $136,000. You don't have sufficient information to complete Form 4562

Pets R Us
Balance Sheet
12/31/14
Assets	1-Jan-14		31-Dec-14
Cash	$ 1,200,000.00		$ 1,037,750.00
Trade Notes and accounts receivable	$ 2,062,500.00		$ 2,147,000.00
Inventories	$ 2,750,000.00		$ 3,030,000.00
Stock investment	$ 1,125,000.00		$ 1,125,000.00
State bonds	$ 375,000.00		$ 375,000.00
Certificates of Deposit	$ 400,000.00		$ 400,000.00
Prepaid Federal tax	$ -		$ 3,977.00
Buildings and other depreciable assets	$ 5,455,000.00		$ 5,455,000.00
Accumulated depreciation	$ (606,000.00)		$ (712,000.00)
Land	$ 812,500.00		$ 812,500.00
Other assets	$ 140,000.00		$ 128,500.00
Total assets	$ 13,714,000.00		$ 13,802,727.00
Liabilities and Equity
Accounts Payable	$ 2,284,000.00		$ 1,975,000.00
Other current liabilities	$ 175,000.00		$ 155,000.00
Mortgages	$ 4,625,000.00		$ 4,575,000.00
Capital Stock	$ 2,500,000.00		$ 2,500,000.00
Retained Earnings	$ 4,130,000.00		$ 4,597,727.00
Total liabilities and equity	$ 13,714,000.00		$ 13,802,727.00

prepare the form 1120 for Pets R Us for 2014