On November 1, 2005, 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 p..m@pki.com.

The employer identification number is 11-1111111, 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 123-45-6789, and Kim's Social Security number is 987-65-4321.

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 2018, the corporation distributed cash dividends of $306,495.

Pet Kingdom's financial statements for 2019 are shown below:

Rental expense 86,000 Depreciation* 80,000 Charitable contributions 30,000 Employee benefit programs 48,000 Premiums on term life 32,000 insurance policies on lives of Janet Morton and Kim Wong; Pet Kingdom is the designated beneficiary Total expenses (1,805,000 Net Income before taxes $858,000 Federal income tax (175,875) Net income per books $682,125 *Depreciation for tax purposes is $110,000. You are not provided enough detailed data to complete a Form 4562 (depreciation). If you solve this problem using H&R Block Tax Software, enter the amount of depreciation on line 20 of Form 1120. Balance Sheet Assets January 1, 2019 December 31, 2019 Cash $ 960,000 $ 680,000 Trade notes and accounts 1,650,000 1,838,000 receivable Inventories 2,200,000 2,424,000 Stock Investment 900,000 900,000 State bonds 300,000 300,000 Certificates of deposit 350,000 350,000 Prepaid Federal Tax -0- 3,630 Buildings and other depreciable 4,365,000 4,365,000 assets Accumulated depreciation (485,000 (565,000) Land 650,000 650,000 Other assets 112,000 102,800 Total assets $11,002,000 $11,048,430 Liabilities and Equity January 1,2019 December 31, 2019 Accounts Payable $ 1,850,000 $ 1,579,800 Other current liabilities 142,000 123,000 Mortgages 3,700,000 3,660,000 Capital stock 2,000,000 2,000,000 Retained earnings 3,310,000 3,685,630 Total liabilities and equity $11,002,000 $11,048.430 During 2018, Pet Kingdom made estimated tax payments of $44,876.25 each quarter to the IRS. Prepare a Form 1120 for Pet Kingdom for tax year 2019. Suggested software: H&R BLOCK Tax Software.Income Statement Income Gross Sales $4,600,000 Sales returns and allowances (160.000) Net Sales $4,440,000 Cost of goods sold (1.840.000 Gross Profit $2,600,000 Dividends received from stock 35,000 Investments in less-than-20%- owned U.S. corporations Interest Income: State bonds $12,000 Certificates of deposit 16.000 28.000 Total income $2,663,000 Expenses Salaries-officers Janet Morton $210,000 Kim Wong 210.000 $420,000 Salaries-clerical and sales 580,000 Taxes (state, local, and 190,000 payroll) Repairs and maintenance 112,000 Interest Expense: Loan to purchase state bonds $ 7,000 Other business loans 174.000 181,000 Advertising 46,000 Rental expense 86,000 Depreciation* 80,000