! Required information [The following information applies to the questions displayed below.] Julio and Milania are owners of Falcons Corporation, an s corporation. Each owns 50 percent of Falcons Corporation. In year 1, Julio and Milania each received distributions of $10,000 from Falcons Corporation. Falcons Corporation (an s Corporation) Income Statement December 31, Year 1 and Year 2 Year 1 Sales revenue $ 320,000 Cost of goods sold (41,000) Salary to owners Julio and Milania (40,000) Employee wages (30,000) Depreciation expense (17,000) Section 179 expense (30,000) Interest income (related to business income) 10,000 Municipal bond income 1,700 Government fines 0 Overall net income $ 173,700 Distributions $ 20,000 Year 2 $ 450,000 (62,000) (80,000) (60,000) (34,000) (50,000) 18,500 4,400 (2,000) $ 184,900 $ 50,000 a. What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above? Assume that Falcons Corporation has $220,000 of qualified property (unadjusted basis). b. Complete Falcons's Form 1120-S, Schedule K, for year 1. c. Complete Julio's 1120-S, Schedule K-1, for year 1. Employer Identification Number: Falcons Corporation EIN: 58-1111111 s Corporation EIN: 59-2222222 Shareholder's identifying number: 111-11-1111