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On May 1, 1989, Brendan McLeod and Duncan Ryan formed Angler Corporation to sell fishing tackle. Pertinent information regarding Angler is summarized as follows: The

On May 1, 1989, Brendan McLeod and Duncan Ryan formed Angler Corporation to sell fishing tackle. Pertinent information regarding Angler is summarized as follows:

  • The business address is 3027 Woodland Ridge Blvd., Baton Rouge, Louisiana 70816.
  • The employer identification number is 75-3392543; the principal business activity code is 451110.
  • Brendan and Duncan each own one-half of the outstanding common stock; no other class of stock is authorized. Brendan is president of the company, and Duncan is secretary-treasurer. Both are full-time employees of the corporation, and each receives a salary of $160,000. Brendans Social Security number is 145-26-2593. Duncans Social Security number is 287-43-4945.
  • The corporation uses the accrual method of accounting and reports on a calendar basis. Inventories are determined by using the lower of cost or market method. For book purposes, the straight-line method of depreciation is used.
  • MACRS depreciation was $71,620 for the year.
  • During 2019, the corporation distributed a cash dividend of $88,000.

Selected portions of Anglers profit and loss statement of 2019 reflect the following debits and credits:

Account

Debit

Credit

Gross sales

$2,537,800

Sales returns and allowances

$93,670

Cost of goods sold

1,007,900

Dividends received from stock

investments in less than 20%

owned U.S. corporations

120,500

Interest income

State bonds

$18,300

Certificates of deposit

15,000

33,300

Premiums on term life insurance

policies on the lives of Brendan

and Duncan; Angler Corporation

is the designated beneficiary

17,200

Salaries-officers

320,000

Salaries-clerical and sales

261,000

Taxes (state, local, and payroll)

39,140

Repairs

19,450

Interest expense

16,030

Fines for dumping toxic waste

8,210

Advertising

6,480

Rental Expense

27,930

Depreciation

47,000

A comparative balance sheet for Angler Corporation reveals the following information:

Assets

December 31, 2018

December 31, 2019

Cash

$480,000

$541,288

Trade notes and accounts receivable

808,200

1,060,600

Inventories

600,000

736,000

Certificates of Deposit

130,000

130,000

State bonds

170,000

170,000

Prepaid Federal tax

---

3,400

Buildings and other depreciable assets

240,000

278,000

Accumulated depreciation

(88,800)

(135,800)

Land

20,000

20,000

Other assets

3,600

1,000

Total assets

$2,363,000

$2,804,488

Liabilities and Equity

Accounts payable

$340,000

$159,000

Other current liabilities

57,860

67,000

Mortgages

220,000

251,000

Capital stock

500,000

500,000

Retained earnings

1,245,140

1,827,488

Total liabilities and equity

$2,363,000

$2,804,488

Net income per books (before any income tax accrual) $827,590

Income Tax Expense 157,242

Net Income $670,348

During 2019, Angler Corporation made estimated tax payments of $160,642 to the IRS. Prepare a Form 1120 for Angler Corporation for tax year 2019. Include Forms 1125-A, 1125-E and Schedule G (Form 1120).

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