The assignment is to prepare a corporate tax return using the facts and figures presented in the Comprehensive Tax Return Problem C:3-66 in Chapter 3 of the textbook. The necessary forms that you will need to complete this assignment are available on IRS.gov.

TAX FORM/RETURN PREPARATION PROBLEMS C:3-66 Melodic Musical Sales, Inc. is located at 5500 Fourth Avenue, City, ST 98765. The cor- poration uses the calendar year and accrual basis for both book and tax purposes. It is engaged in the sale of musical instruments with an employer identification number (EIN) of XX-2017015. The company incorporated on December 31, 2011, and began busi- ness on January 2, 2012. Table C:3-4 contains balance sheet information at January 1, 2015, and December 31, 2015. Table C:3-5 presents an income statement for 2015. These schedules are presented on a book basis. Other information follows the tables. Estimated Tax Payments (Form 2220): The corporation deposited estimated tax payments as follows: $ 90,000 180,000 220,000 220,000 $710,000 April 15, 2015 June 15, 2015 September 15, 2015 December 15, 2015 Total Melodic Musical Sales, Inc.-Book Balance Sheet Information January 1, 2015 Debit December 31, 2015 Debit Credit Credit Account $ 477,193 400,000 2$ $ 214,833 320,000 2$ 2,000,000 168,000 32,000 50,000 250,000 1,000,000 Cash Accounts receivable Allowance for doubtful accounts 16,000 20,000 Inventory Investment in corporate stock Investment in municipal bonds Cash surrender value of insurance policy Land 2,800,000 50,000 32,000 65,000 250,000 1,000,000 Buildings Accumulated depreciation-Buildings Equipment Accumulated depreciation-Equipment Trucks 50,000 70,000 600,000 1,200,000 150,000 180,000 100,000 100,000 Accumulated depreciation-Trucks Accounts payable Notes payable (short-term) Accrued payroll taxes Accrued state income taxes Accrued federal income taxes 50,000 270,000 400,000 15,000 6,000 94,532 900,000 217,083 800,000 3,351,578 $4,734,833 $4,734,833 $6,374,193 $6,374,193 30,000 300,000 500,000 12,000 3,600 2,000 1,200,000 71,233 800,000 1,600,000 Bonds payable (long-term) Net deferred tax liability Capital stock-Common Retain earnings-Unappropriated Totals IABLE C:3-5 Melodic Musical Sales, Inc.-Book Income Statement 2015 $ 8,000,000 (200,000) Sales Returns $ 7,800,000 Net sales Beginning inventory Purchases Ending inventory Cost of goods sold $2,000,000 4,400,000 (2,800,000) (3,600,000) $ 4,200,000 Gross profit Expenses: Depreciation Repairs General insurance $ 130,000 16,640 44,000 24,000 520,000 320,000 57,600 38,400 40,000 24,000 Net premium-Officers' life insurance Officers' compensation Other salaries Utilities Advertising Legal and accounting fees Charitable contributions Payroll taxes Interest expense 50,000 168,000 36,000 Bad debt expense Total expenses Gain on sale of equipment Interest on municipal bonds Net gain on stock sales Dividend income (1,468,640) 80,000 4,000 17,000 9,600 $ 2,841,960 (950,382) (60,000) $ 1,831,578 Net income before income taxes Federal income tax expense State income tax expense Net income Additional Information (Schedule K): Do not check box Fill in the correct amount 3 Accrual 451140 Retail sales Musical instruments 10 Do not check box Not applicable 11 12 3 4 a No No 13-14 No Yes; omit Schedule G No 15a 16-18 No Not applicable No 6-7 No No Organizational Expenditures: The corporation incurred $3,000 of organizational expenditures on January 2, 2012. For book purposes, the corporation expensed the entire expenditure. For tax purposes, the corporation elected under Sec. 248 to deduct the entire $3,000 in 2012. Therefore, no amortization expenditures appear in the tax return or book financial statements for the current year. TAX FORM/RETURN PREPARATION PROBLEMS C:3-66 Melodic Musical Sales, Inc. is located at 5500 Fourth Avenue, City, ST 98765. The cor- poration uses the calendar year and accrual basis for both book and tax purposes. It is engaged in the sale of musical instruments with an employer identification number (EIN) of XX-2017015. The company incorporated on December 31, 2011, and began busi- ness on January 2, 2012. Table C:3-4 contains balance sheet information at January 1, 2015, and December 31, 2015. Table C:3-5 presents an income statement for 2015. These schedules are presented on a book basis. Other information follows the tables. Estimated Tax Payments (Form 2220): The corporation deposited estimated tax payments as follows: $ 90,000 180,000 220,000 220,000 $710,000 April 15, 2015 June 15, 2015 September 15, 2015 December 15, 2015 Total Melodic Musical Sales, Inc.-Book Balance Sheet Information January 1, 2015 Debit December 31, 2015 Debit Credit Credit Account $ 477,193 400,000 2$ $ 214,833 320,000 2$ 2,000,000 168,000 32,000 50,000 250,000 1,000,000 Cash Accounts receivable Allowance for doubtful accounts 16,000 20,000 Inventory Investment in corporate stock Investment in municipal bonds Cash surrender value of insurance policy Land 2,800,000 50,000 32,000 65,000 250,000 1,000,000 Buildings Accumulated depreciation-Buildings Equipment Accumulated depreciation-Equipment Trucks 50,000 70,000 600,000 1,200,000 150,000 180,000 100,000 100,000 Accumulated depreciation-Trucks Accounts payable Notes payable (short-term) Accrued payroll taxes Accrued state income taxes Accrued federal income taxes 50,000 270,000 400,000 15,000 6,000 94,532 900,000 217,083 800,000 3,351,578 $4,734,833 $4,734,833 $6,374,193 $6,374,193 30,000 300,000 500,000 12,000 3,600 2,000 1,200,000 71,233 800,000 1,600,000 Bonds payable (long-term) Net deferred tax liability Capital stock-Common Retain earnings-Unappropriated Totals IABLE C:3-5 Melodic Musical Sales, Inc.-Book Income Statement 2015 $ 8,000,000 (200,000) Sales Returns $ 7,800,000 Net sales Beginning inventory Purchases Ending inventory Cost of goods sold $2,000,000 4,400,000 (2,800,000) (3,600,000) $ 4,200,000 Gross profit Expenses: Depreciation Repairs General insurance $ 130,000 16,640 44,000 24,000 520,000 320,000 57,600 38,400 40,000 24,000 Net premium-Officers' life insurance Officers' compensation Other salaries Utilities Advertising Legal and accounting fees Charitable contributions Payroll taxes Interest expense 50,000 168,000 36,000 Bad debt expense Total expenses Gain on sale of equipment Interest on municipal bonds Net gain on stock sales Dividend income (1,468,640) 80,000 4,000 17,000 9,600 $ 2,841,960 (950,382) (60,000) $ 1,831,578 Net income before income taxes Federal income tax expense State income tax expense Net income Additional Information (Schedule K): Do not check box Fill in the correct amount 3 Accrual 451140 Retail sales Musical instruments 10 Do not check box Not applicable 11 12 3 4 a No No 13-14 No Yes; omit Schedule G No 15a 16-18 No Not applicable No 6-7 No No Organizational Expenditures: The corporation incurred $3,000 of organizational expenditures on January 2, 2012. For book purposes, the corporation expensed the entire expenditure. For tax purposes, the corporation elected under Sec. 248 to deduct the entire $3,000 in 2012. Therefore, no amortization expenditures appear in the tax return or book financial statements for the current year