TAX FORM 1120 PAGE 1---PAGE 3

Note: This problem is for the 2018 tax year. On February 12, 2005, Nancy Trout and Delores Lake formed Kingfisher Corporation to sell fishing tackle. Pertinent information regarding Kingfisher is summarized as follows: Kingfisher's business address is 1717 Main Street, Ely, MN 55731; its telephone number is (218) 555-2211; and its e-mail address is kingfisher@kf.com. The employer identification number is 11-1111113, and the principal business activity code is 451110. Nancy owns 50% of the common stock and is president of the company, and Delores owns 50% of the common stock and is vice president of the company. No other class of stock is authorized. Both Nancy and Delores are full-time employees of Kingfisher. Nancy's Social Security number is 123-45-6788, and Delores's Social Security number is 123-45-6787. Kingfisher is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Kingfisher uses the straight-line method of deprecation for book purposes and accelerated depreciation (MACRS) for tax purposes. . During 2018, the corporation distributed cash dividends of $80,000. Kingfisher's financial statements for 2018 are shown below and on the next page. Income Statement Income Gross sales $2,408,000 Sales returns and allowances (80,000) Net sales $2,328,000 Cost of goods sold (920,000) Gross profit $1,408,000 12,000 $14,000 10,000 24,000 $1,444,000 Dividends received from stock investments in less-than-20%- owned U.S. corporations Interest income: State bonds Certificates of deposit Total income Expenses Salaries-officers: Nancy Trout Delores Lake Salaries-clerical and sales Taxes (state, local, and payroll) Repairs and maintenance Interest expense: Business loans Loan to purchase state bonds Advertising Rental expense Depreciation $160,000 160,000 $320,000 290,000 85,000 56,000 $12,000 8,000 20,000 6,000 68,000 40,000 15,000 24,000 Charitable contributions Employee benefit programs Premiums on term life insurance policies on lives of Janet Morton and Kim Wong; Pet Kingdom is the designated beneficiary Total expenses Net income before taxes Federal income tax Net income per books 16,000 (940,000) $504,000 (106,680) $397,320 * You are not provided enough detailed information to complete a Form 4562 (depreciation). If you solve this problem using Intuit ProConnect, enter the amount of deprecation on line 20 of Form 1120. Assets Cash Trade notes and accounts receivable Inventories Balance Sheet January 1, 2018 $380,000 308,400 900,000 December 31, 2018 $337,300 480,280 1,012,000 State bonds Federal income tax refund Certificates of deposit Stock investments Buildings and other depreciable assets Accumulated depreciation Land Other assets 160,000 -0- 140,000 300,000 240,000 (88,000) 20,000 3,600 $2,363,200 160,000 1,320 140,000 300,000 240,000 (128,800) 20,000 2,000 $2,564,100 Total assets Liabilities and Equity Accounts payable Other current liabilities Mortgages Capital stock Retained earnings Total liabilities and equity Required: January 1, 2018 $300,000 80,300 210,000 500,000 1,272,900 $2,363,200 December 31, 2018 $233,880 40,000 200,000 500,000 1,590,220 $2,564,100 During 2018, Kingfisher made estimated tax payments of $27,000 each quarter to the IRS. Prepare a Form 1120 for Kingfisher for tax year 2018. During 2018, Kingfisher made estimated tax payments of $27,000 each quarter to the IRS. Prepare a Form 1120 for Kingfisher for tax year 2018. If an amount box does not require an entry or the answer is zero, enter "0". Enter all amounts as positive numbers, unless otherwise instructed. If required, round amounts to the nearest dollar. Make realistic assumptions about any missing data. 5 Interest .. 24,000 Income 6 Gross rents ............................................... 7 Gross royalties ......... .................. 8 Capital gain net income (attach Schedule D (Form 1120)) ......... 9 Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797).. 10 Other income (see instructions-attach statement)........ 11 Total income. Add lines 3 through 10........... 1,444,000 Compensation of officers (see instructions-attach Form 1125-E)...... 13 Salaries and wages (less employment credits).. 320,000 14 56,000 14 Repairs and maintenance ....... 15 Bad debts ............................................................................................................................ 15 16 Rents ....... 68,000 on deductions.) 17 Taxes and licenses...... 85,000 18 Interest (see instructions) ........ 20,000 27 Total deductions. Add lines 12 through 26... 634,000 x 28 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. 810,000 x 29a Net operating loss deduction (see instructions) ......... 29a b Special deductions (Schedule C, line 24, column (c))...... 29b 6,000 c Add lines 29a and 29b 29c 6,000 30 Taxable income. Subtract line 29c from line 28. See instructions ..... 30 804,000 Note: This problem is for the 2018 tax year. On February 12, 2005, Nancy Trout and Delores Lake formed Kingfisher Corporation to sell fishing tackle. Pertinent information regarding Kingfisher is summarized as follows: Kingfisher's business address is 1717 Main Street, Ely, MN 55731; its telephone number is (218) 555-2211; and its e-mail address is kingfisher@kf.com. The employer identification number is 11-1111113, and the principal business activity code is 451110. Nancy owns 50% of the common stock and is president of the company, and Delores owns 50% of the common stock and is vice president of the company. No other class of stock is authorized. Both Nancy and Delores are full-time employees of Kingfisher. Nancy's Social Security number is 123-45-6788, and Delores's Social Security number is 123-45-6787. Kingfisher is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Kingfisher uses the straight-line method of deprecation for book purposes and accelerated depreciation (MACRS) for tax purposes. . During 2018, the corporation distributed cash dividends of $80,000. Kingfisher's financial statements for 2018 are shown below and on the next page. Income Statement Income Gross sales $2,408,000 Sales returns and allowances (80,000) Net sales $2,328,000 Cost of goods sold (920,000) Gross profit $1,408,000 12,000 $14,000 10,000 24,000 $1,444,000 Dividends received from stock investments in less-than-20%- owned U.S. corporations Interest income: State bonds Certificates of deposit Total income Expenses Salaries-officers: Nancy Trout Delores Lake Salaries-clerical and sales Taxes (state, local, and payroll) Repairs and maintenance Interest expense: Business loans Loan to purchase state bonds Advertising Rental expense Depreciation $160,000 160,000 $320,000 290,000 85,000 56,000 $12,000 8,000 20,000 6,000 68,000 40,000 15,000 24,000 Charitable contributions Employee benefit programs Premiums on term life insurance policies on lives of Janet Morton and Kim Wong; Pet Kingdom is the designated beneficiary Total expenses Net income before taxes Federal income tax Net income per books 16,000 (940,000) $504,000 (106,680) $397,320 * You are not provided enough detailed information to complete a Form 4562 (depreciation). If you solve this problem using Intuit ProConnect, enter the amount of deprecation on line 20 of Form 1120. Assets Cash Trade notes and accounts receivable Inventories Balance Sheet January 1, 2018 $380,000 308,400 900,000 December 31, 2018 $337,300 480,280 1,012,000 State bonds Federal income tax refund Certificates of deposit Stock investments Buildings and other depreciable assets Accumulated depreciation Land Other assets 160,000 -0- 140,000 300,000 240,000 (88,000) 20,000 3,600 $2,363,200 160,000 1,320 140,000 300,000 240,000 (128,800) 20,000 2,000 $2,564,100 Total assets Liabilities and Equity Accounts payable Other current liabilities Mortgages Capital stock Retained earnings Total liabilities and equity Required: January 1, 2018 $300,000 80,300 210,000 500,000 1,272,900 $2,363,200 December 31, 2018 $233,880 40,000 200,000 500,000 1,590,220 $2,564,100 During 2018, Kingfisher made estimated tax payments of $27,000 each quarter to the IRS. Prepare a Form 1120 for Kingfisher for tax year 2018. During 2018, Kingfisher made estimated tax payments of $27,000 each quarter to the IRS. Prepare a Form 1120 for Kingfisher for tax year 2018. If an amount box does not require an entry or the answer is zero, enter "0". Enter all amounts as positive numbers, unless otherwise instructed. If required, round amounts to the nearest dollar. Make realistic assumptions about any missing data. 5 Interest .. 24,000 Income 6 Gross rents ............................................... 7 Gross royalties ......... .................. 8 Capital gain net income (attach Schedule D (Form 1120)) ......... 9 Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797).. 10 Other income (see instructions-attach statement)........ 11 Total income. Add lines 3 through 10........... 1,444,000 Compensation of officers (see instructions-attach Form 1125-E)...... 13 Salaries and wages (less employment credits).. 320,000 14 56,000 14 Repairs and maintenance ....... 15 Bad debts ............................................................................................................................ 15 16 Rents ....... 68,000 on deductions.) 17 Taxes and licenses...... 85,000 18 Interest (see instructions) ........ 20,000 27 Total deductions. Add lines 12 through 26... 634,000 x 28 Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11. 810,000 x 29a Net operating loss deduction (see instructions) ......... 29a b Special deductions (Schedule C, line 24, column (c))...... 29b 6,000 c Add lines 29a and 29b 29c 6,000 30 Taxable income. Subtract line 29c from line 28. See instructions ..... 30 804,000