Refer to the facts in Tax Form/Return Preparation Problem C:9-58. Now assume the com pany is an S corporation rather than a partnership. Additional facts are as follows: Drs. Bailey and Firth formed the corporation on January 1, 2013, and the corporation immediately elected S corporation status effective at the beginning of 2013. Upon formation of the corporation, Dr. Bailey received common stock worth S1.2 million, and Dr. Firth received common stock worth $2.8 million. e The balance sheet informationis the same as in Table C:9-3 except the equity section is as follows Lanuary 1. 2014December 31. 2014 Common stock Retained earningS $4,000,000 171,360 $4,000,000 91,020 The $180,000 paid to Dr. Bailey is salary constituting W-2 wages (instead of a guaran- teed paymentignore employment taxes (social security, etc.) on Dr. Bailey's salary. Quified production activities income (QPAI equals S2.24 millon, but employer's W-2 wages allocable to U.S. production activities equal $1.16 milion (because of Dr. Bailey's salary). The company, being an eligible small pass-through S corporation, uses the smallbess simplification overall method for reporting these activities (see discussion for Line 12d of Schedule K and Line 12 of Schedule K-1 in the Form 1120S instructions) Use book numbers for Schedule L and Schedule M-1 in Form 1120S