Year 1	Year 2
Sales revenue		300,000	430,000
COGS		(40,000)	(60,000)
Salary to owners		(40,000)	(80,000)
Employee wages		(25,000)	(50,000)
Depreciation ex.		(20,000)	(40,000)
Sect. 179 ex.		(30,000)	(50,000)
Interest income		12,000	22,500
M. Bond income		1,500	4,000
Gov't fines		-	(2,000)
Net income		158,500	174,500

Julio and Milania are owners of Falcons Corporation, an S corporation. They each own 50 percent of Falcons Corporation. In year 1, Julio and Milania re-ceived distributions of $20,000 and $10,000, respectively, from Falcons Corporation.

a) What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above?

b) Complete Falcons Form 1120S, Schedule K for year 1.

c) Complete Julios 1120S, Schedule K-1 for year