You are an up-and-coming tax associate at the Einstein accounting firm in Los Altos, California. Recently, your partner, Thomas Edison asked you to prepare the Federal tax return for a company founded by an old friend Einsteins Firm

Einsteins Firm was formed in 1992 by Steve Jobs and Stephen Wozniak. Steve and Stephen officially incorporated their business on April 1, 1976. Einsteins Firm sells miniature architectural models, blue French horns, and the Sensory Deprivation 5000 (as seen on Shark Tank). Steve owns 60% of the outstanding common stock of Einsteins Firm and Stephen owns the remaining 40%. Einsteins Firm is located at One Infinite Loop, Cupertino, CA 95014. Its employer identification number is 1234567 and its business activity code is 453990 Miscellaneous Retailer. Einsteins Firm uses the accrual method of accounting and has a calendar yearend. The officers of Einsteins Firm and their social security numbers are: Name Title SS number Steve Jobs CEO/President 535457892 Stephen Wozniak Executive VP 789361277 Ronald Wayne VP 321789844 Tim Cook Secretary 411657833

1. Interest income includes: From a City of New York bond of $7,500 From a U.S. Treasury bond $9,375 From a money market account $5,625

2. Miscellaneous expenses include parking fines issued by the City of New York $300

3. Einstein's Firm dividend income came from Goliath National Bank (GNB). Einsteins Firm owned 25,000 shares of the stock in Cardinal at the beginning of the year. This represented 95% of GNB outstanding stock.

4. On July 22, 2021 Einsteins Firm sold 2,500 shares of its GNB stock. Selling price $50,000 Einsteins Firm originally purchased these shares on April 24, 2015, $61,000

5. Accounts receivable written off by Einsteins Firm during the year were $52,500

6. Warranty claims actually paid during the year are $41,000

7. The corporation uses MACRS depreciation for tax purposes. The corporation purchased all of its equipment on July 1, 2016. Einsteins Firm took the maximum amount of 179 depreciation available in 2016 (no bonus depreciation). The equipment is all 7-year property. Cost of the equipment $1,125,000

8. During the year, Einsteins Firm sold some equipment. Selling price $18,000 Original purchase price $16,500 Total book depreciation on the equipment $5,550 Total tax depreciation on the equipment is $7,800

9. On December 1, 2021 Einsteins Firm paid a dividend to its shareholders of $120,000

10. Wages to nonofficers are $900,000

11. The corporation paid the following compensation to its officers: Steve Jobs $337,500 Stephen Wozniak $322,500 Ronald Wayne $217,500 Tim Cook $172,500

12. Einsteins Firm made four equal estimated tax payments: If it has overpaid its federal tax liability, Einsteins Firm would like to receive a refund. $57,750

Statement of Stockholder's Equity Balance Sheet Assets Income Statement Revenues Sales Less: Sales Returns and Allowances (-) Net Sales Cash Retained Earnings - BOY Net Income Dividends (-) Retained Earnings - EOY A/R Less: ADA (-) Net A/R Interest Income Capital gain/loss Inventory Common Stock - BOY Issuances (-) Retirements (-) Common Stock - EOY Dividends (received) Investments in state & local bonds Investments in stock Investments in U.S. government bonds Total Investments Gain/loss from disposition of fixed assets Total Stockholders' Equity Total Revenue Equipment Less: Accumulated Depreciation (-) Net PPE Land Other Assets Total Assets Liabilities and Owner's Equity (-) Expenses (-) Advertising expense Bad debt expense Charitable contributions Compensation expense Cost of goods sold Depreciation expense Entertainment expense Federal income tax expense Interest expense Maintenance expense Meals expense Miscellaneous expense Other taxes expense Pension plans expense Professional services expense Property tax expense State income tax expense Supplies expense Warranty Expense Total Expenses Accounts Payable Other Current Liabilities Mortgage Payable Other Liabilities Unearned Rent Revenue Total Liabilities Stockholders' Equity Total Liabilities and Capital MIHI Net Income Check -- must equal zero Statement of Stockholder's Equity Balance Sheet Assets Income Statement Revenues Sales Less: Sales Returns and Allowances (-) Net Sales Cash Retained Earnings - BOY Net Income Dividends (-) Retained Earnings - EOY A/R Less: ADA (-) Net A/R Interest Income Capital gain/loss Inventory Common Stock - BOY Issuances (-) Retirements (-) Common Stock - EOY Dividends (received) Investments in state & local bonds Investments in stock Investments in U.S. government bonds Total Investments Gain/loss from disposition of fixed assets Total Stockholders' Equity Total Revenue Equipment Less: Accumulated Depreciation (-) Net PPE Land Other Assets Total Assets Liabilities and Owner's Equity (-) Expenses (-) Advertising expense Bad debt expense Charitable contributions Compensation expense Cost of goods sold Depreciation expense Entertainment expense Federal income tax expense Interest expense Maintenance expense Meals expense Miscellaneous expense Other taxes expense Pension plans expense Professional services expense Property tax expense State income tax expense Supplies expense Warranty Expense Total Expenses Accounts Payable Other Current Liabilities Mortgage Payable Other Liabilities Unearned Rent Revenue Total Liabilities Stockholders' Equity Total Liabilities and Capital MIHI Net Income Check -- must equal zero