John Parsons (123-45-6781) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111111), a candy company located at 1005 16th Street, Cut and Shoot, TX 77303. Premium’s S election was made on January 15, 2011, its date of incorporation. The following information was taken from the company’s 2018 income statement. 

A comparative balance sheet follows. 

Premium’s accounting firm provides the following additional information. 

Distributions to shareholders.............................................................$100,000 

Beginning balance, Accumulated adjustments account.............111,148 

Using the preceding information, prepare a Form 1120S and Schedule K–1s for John Parsons and George Smith, 5607 20th Street, Cut and Shoot, TX 77303. Do not complete the Forms 1125–A, 1125–E, and 4562. If any information is missing, make realistic assumptions. Suggested software: ProConnect Tax Online.

Transcribed Image Text:

Interest income $ 100,000 Gross sales receipts Beginning inventory 2,410,000 9,607 Direct labor (203,102) Direct materials purchased (278,143) Direct other costs (249,356) Ending inventory Salaries and wages 3,467 (442,103) Officers' salaries ($75,000 each to Parsons and Smith) (150,000) Repairs Depreciation expense, tax and book Interest expense (206,106) (15,254) (35,222) Rent expense (operating) (40,000) Тахes (65,101) Charitable contributions (cash) (20,000) Advertising expenses Payroll penalties (20,000) (15,000) Other deductions (59,899) Book income 704,574