Please use the information provided below to complete Form 1120, Form 1125-E, and Schedule G for Form 1120.

Completing Form 1120 INSTRUCTIONS Please use the information below to complete Form 1120 and Schedule G for Form 1120. Blank forms can be found in the Hands On Assignment page or in Doc Sharing. If you have a tax-software package, please feel free to use the package but be aware that I will not be able to answer specific questions about the software package. GENERAL COMPANY INFORMATION Margaret Brown and Joel Lee each own 50% of Designs Inc., with no other class of stock authorized. On June 6, 2009, they formed to provide design services. Their business activity code is 541400. Designs Inc.'s business address is 2134 Merry Lane, Las Cruces, NM, 08801. The telephone number is (575) 541-1122, and the e-mail address is designsinc@cdi.com. The employer identification number is 11-1111111. Margaret is the president of the company, and Joel is the vice president. Margaret and Joel are the only full-time designers employed by Designs Inc., and they perform all of the design services of the corporation. Margaret's Social Security number is 12345-6789, and Joel's Social Security number is 555-48-9898. Designs Inc. is an accrual method, calendar-year taxpayer. Designs Inc. uses the straight-line method of depreciation for both book and tax purposes. (You are not provided enough detailed data to complete a Form 4562 [depreciation]. Enter the amount of depreciation on line 20 of Form 1120.) The corporation does not maintain any inventory. During the year, the corporation distributed cash dividends of $10,000. The domestic production activities deduction (DPAD) for the year is $947. You are not provided enough detailed data to complete a Form 8903 (domestic production activities deduction). Enter the amount of the DPAD on line 25 of Form 1120. During the year, Designs Inc. made estimated tax payments of $1,500 each quarter to the IRS. Designs Inc. Income Statement Income Design fees Interest income (certificates of deposit) Total income $739,000 2,700 $741,700 Expenses Salariesofficers Margaret Brown $190,000 Joel Lee 190,000 Salariesclerical Taxes Property 26,810 Payroll 23,280 State income 3,140 Other miscellaneous 2,390 Repairs and maintenance Meals and entertainment Travel Charitable contributions Interest expense on business loans Advertising Rental expense Depreciation Contributions to pension plans Employee benefit programs Accounting service Dues and subscriptions Insurance Legal and professional services Miscellaneous Telephone Total expenses Net income before taxes Federal income tax Net income per books $380,000 61,000 55,620 16,340 9,800 5,600 1,200 31,100 17,650 9,270 35,910 31,000 21,170 13,790 5,100 17,750 11,000 4,360 3,160 (730,820) $ 10,880 (5,192) $ 5,688 Designs Inc. Balance Sheet Assets January 1, 2012 December 31, 2012 Cash Accounts receivable Certificates of deposit Depreciable assets Accumulated depreciation Land Other assets Total assets $ 35,610 45,100 134,000 210,922 (47,520) 42,000 3,638 $ 423,750 ====== Liabilities and Equity January 1, 2012 December 31, 2012 Accounts payable Other current liabilities Mortgages Capital stock Retained earnings Total liabilities and equity $ 26,550 15,110 126,000 200,000 56,090 $ 423,750 ====== $ 42,580 43,300 143,000 221,488 (83,430) 42,000 2,490 $ 411,428 ====== $ 27,497 17,853 114,300 200,000 51,778 $ 411,428 =======