The directions ask to calculate Book/ Tax Differences, book income, and taxable income in an excel spreadsheet

Taxpayer Information:

Bazinga, Inc. is an accrual-basis, calendar-year wholesaler.

• The corporation was incorporated on July 14, 2015.
• Its employer identification number is 31-4957632.
• Bazingas main office is located at 15151 DeKalb Avenue, Sycamore, IL 60178.
• Total assets as of December 31, 2020 of $9,642,900.

• Bazingas 2020 GAAP income statement reports the following:
  • $3,326,000 of total sales for the year. Returns and allowances of $62,000 were subsequently granted to customers who received goods that was damaged
  • $12,700 of interest income was received during the year. Of this total, $8,600 was earned on City of Chicago bonds
  • $75,000 of dividends received from a domestic corporation in which Bazinga owns 20% of the outstanding stock
  • ($28,700) loss on the sale of investment securities
  • $11,000 gain on the sale of investment land
  • $1,075,900 cost of goods sold
  • $280,000 officers compensation
  • $712,000 other salaries and wages
  • $174,300 federal income tax expense
  • $127,400 depreciation expense
  • $70,200 of taxes [$15,000 state income taxes; $55,200 payroll taxes]
  • $6,900 interest expense
  • $10,800 repairs
  • $63,400 rent expense
  • $29,500 advertising expense
  • $32,800 bad debt expense
  • $14,300 property insurance premiums
  • $6,100 key-person life insurance premiums
  • $7,500 business meals from restaurants
  • $3,300 business meals not from restaurants

Additional information is as follows:

• Bazingas financial reporting already reflects the capitalization of certain indirect costs to GAAP inventory this year (i.e., DR to Inventory, CR to certain period expenses). Tax law requires the following additional costs to be capitalized to tax-basis inventory:
  • $84,000 of other salaries and wages
  • $42,000 of rent expense
  • NOTE combine and label these differences as UNICAP in Schedule M-1
• Cost of goods sold for tax purposes is $1,262,400.
• MACRS depreciation totaled $185,900 for the year.
• C-suite bonuses of $58,000 are included in the accrued officers compensation. These bonuses will be paid out on April 1, 2021.
• Bazinga capitalized organizational costs of $7,800 incurred to incorporate the business in 2015. These costs were expensed in 2015 for GAAP purposes.
• Accounts receivable totaling $37,600 were written off as uncollectible this year.
• Bazinga received $27,000 of prepaid rent in late December 2020 from a company that will lease excess space in its largest warehouse from March 1 through November 30, 2021.
• The tax workpapers show a net operating loss carryforward of $74,600.
• Bazinga made the following estimated income tax payments to the IRS for 2020:
  • 1^st quarter $38,000
  • 2^nd quarter 43,000
  • 3^rd quarter 42,000
  • 4^th quarter 40,000

• Bazinga does not qualify for any other tax credits in 2020.
• Any overpayment of 2020 tax should be credited to its 2021 estimated taxes.