TAX FORM 1120 PAGE 4,5,6

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. 8 . Check this box if the corporation issued publicly offered debt instruments with original issue discount ......... If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments. Enter the amount of tax-exempt interest received or accrued during the tax year $ 0 x 9 b Less allowance for bad debts ........ 0 X 3 Inventories ....... 900,000 1,012,000 4 U.S. government obligations ... 5 Tax-exempt securities (see instructions) .... 160,000 160,000 140,000 x 140,000 x 6 other current assets (attach statement).... 7 Loans to shareholders .. 8 Mortgage and real estate loans 9 Other investments (attach statement)..... 10a Buildings and other depreciable assets. 240,000 240,000 88,000 X 88,000 x 128,800 | 128,800 x b Less accumulated depreciation ........ 11a Depletable assets. b Less accumulated depletion ...... 12 Land (net of any amortization).. 13a Intangible assets (amortizable only) ....... b Less accumulated amortization ........ 14 Other assets (attach statement) ......... 3,600 X 2,000 x 15 Total assets.. 2,363,200 2,564,100 Liabilities and Shareholders' Equity 16 Accounts payable.. 300,000 233,880 Mortgages, notes, bonds payable in less than 1 year 210,000 200,000 18 Other current liabilities (attach statement).. 80,300 40,000 Depreciation ........ $___ 5 Expenses recorded on books this year not deducted on this return (itemize): a Depreciation ............$--- b Charitable contributions ..$--- c Travel and entertainment. $__ b Charitable contributions ----------------- 103,000 X 9 Add lines 7 and 8. 14,000 6 Add lines 1 through 5 ........ 607,000 x 10 Income (page 1, line 28)-line 6 less line 9 593,000 Schedule M-2 Analysis of Unappropriated Retained Earnings per Books (Line 25, Schedule L) 1 Balance at beginning of year 1,272,900 5 Distributions: a Cash ....... 80,000 V 2 Net income (loss) per books ........... 397,320 b Stock ......... 3 Other increases (itemize): ---- c Property .......... 6 Other decreases (itemize)------ ---------------- 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. 8 . Check this box if the corporation issued publicly offered debt instruments with original issue discount ......... If checked, the corporation may have to file Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments. Enter the amount of tax-exempt interest received or accrued during the tax year $ 0 x 9 b Less allowance for bad debts ........ 0 X 3 Inventories ....... 900,000 1,012,000 4 U.S. government obligations ... 5 Tax-exempt securities (see instructions) .... 160,000 160,000 140,000 x 140,000 x 6 other current assets (attach statement).... 7 Loans to shareholders .. 8 Mortgage and real estate loans 9 Other investments (attach statement)..... 10a Buildings and other depreciable assets. 240,000 240,000 88,000 X 88,000 x 128,800 | 128,800 x b Less accumulated depreciation ........ 11a Depletable assets. b Less accumulated depletion ...... 12 Land (net of any amortization).. 13a Intangible assets (amortizable only) ....... b Less accumulated amortization ........ 14 Other assets (attach statement) ......... 3,600 X 2,000 x 15 Total assets.. 2,363,200 2,564,100 Liabilities and Shareholders' Equity 16 Accounts payable.. 300,000 233,880 Mortgages, notes, bonds payable in less than 1 year 210,000 200,000 18 Other current liabilities (attach statement).. 80,300 40,000 Depreciation ........ $___ 5 Expenses recorded on books this year not deducted on this return (itemize): a Depreciation ............$--- b Charitable contributions ..$--- c Travel and entertainment. $__ b Charitable contributions ----------------- 103,000 X 9 Add lines 7 and 8. 14,000 6 Add lines 1 through 5 ........ 607,000 x 10 Income (page 1, line 28)-line 6 less line 9 593,000 Schedule M-2 Analysis of Unappropriated Retained Earnings per Books (Line 25, Schedule L) 1 Balance at beginning of year 1,272,900 5 Distributions: a Cash ....... 80,000 V 2 Net income (loss) per books ........... 397,320 b Stock ......... 3 Other increases (itemize): ---- c Property .......... 6 Other decreases (itemize)