SCHEDULE M3 LINE 28 HELP

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 Kingdom's 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. Janet's Social Security number is 123-45-6788, and Kim's 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.

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

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.

Schedule M-3 I NEED HELP FILLING ALL THE QUESTION MARKS, I DONT KNOW HOW I CAN MAKE IT MORE CLEAR ALL THE INFORMATION IS ABOVE. The QUESTION MARKS ARE IN BOLD!!!!!!!

Part II

Reconciliation of Net Income (Loss) per Income Statement of Includible Corporations With Taxable Income per Return (see instructions)

	Income (Loss) Items (Attach statements for lines 1 through 12)	(a) Income (Loss) per Income Statement		(b) Temporary Difference		(c) Permanent Difference		(d) Income (Loss) per Tax Return
7	U.S. dividends not eliminated in tax consolidation . . . . . . . . . . . . . . . .	43750						43750
13	Interest income (see instructions) . .	35000				-15000		20000
17	Cost of goods sold (see instructions)	(2300000)						(2300000)
26	Total income (loss) items. Combine lines 1 through 25 . . . . .	-2221250		0		-15000		-2236250
27	Total expense/deduction items (from Part III, line 39) . . . . . . . . .	-621734		-30000		270734		-381000
28	Other items with no differences . . .	?????????????						?????????
29a	Mixed groups, see instructions. All others, combine lines 26 through 28.	852016		-30000		255734		1077750
30	Reconciliation totals. Combine lines 29a through 29c . . . . . . . . .	852016		-30000		255734		1077750
	Note: Line 30, column (a), must equal Part I, line 11, and column (d) must equal Form 1120, page 1, line 28.
Schedule M-3 (Form 1120) (Rev. 12-2019)