Please prepare a tax return:

On November 1, 2008, 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 Kingdoms 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. Janets Social Security number is 123-45-6788, and Kims 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 2019, the corporation distributed cash dividends of $250,000.

During 2019, Pet Kingdom made estimated tax payments of $56,000 each quarter to the IRS. Prepare a Form 1120 for Pet Kingdom for tax year 2019.

Pet Kingdoms financial statements for 2019 are shown on the following pages

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 Salaries-officers: Janet Morton $ 262,500 Kim Wong 262,500 $525,000 Salaries-clerical 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 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). Balance Sheet Assets Cash Trade notes and accounts receivable Inventories Stock investment State bonds Certificates of deposit Prepaid Federal tax Buildings and other depreciable assets Accumulated depreciation Land Other assets Total assets Liabilities and Equity Accounts payable Other current liabilities Mortgages Capital stock Retained earnings Total liabilities and equity January 1, 2019 $ 1,200,000 2,062,500 2,750,000 1,125,000 375,000 400,000 -0- 5,455,000 (606,000) 812,500 140,000 $13,714,000 December 31, 2019 $ 1,039,461 2,147,000 3,030,000 1,125,000 375,000 400,000 2,266 5,455,000 (712,000) 812,500 128,500 $13,802,727 January 1, 2019 $ 2,284,000 175,000 4,625,000 2,500,000 4,130,000 $13,714,000 December 31, 2019 $ 1,840,711 155,000 4,575,000 2,500,000 4,732,016 $ 13,802,727