Question During 2012, Pet Kingd

29 Jun Question During 2012, Pet Kingd

QuestionQuestion
During 2012, Pet Kingd
During 2012, Pet Kingdom made estimated tax payments of $107,000 each quarter to the IRS. Prepare a Form 1120 for Pet Kingdom for tax year 2012. Suggested software:

H&R BLOCK At Home.

2. On February 12, 2002, Nancy Trout and Delores Lake formed Kingfisher Corporation to

sell fishing tackle. Pertinent information regarding Kingfisher is summarized as follows:

• Kingfisher’s business address is 1717 Main Street, Ely, MN 55731; its telephone num-

ber is (218) 555-2211; and its e-mail address is [email protected].com.

• The employer identification number is 11-1111111, and the principal business activity

code is 451110.

• Nancy owns 50% of the common stock and is president of the company, and Delores

owns 50% of the common stock and is vice president of the company. No other class

of stock is authorized.

• Both Nancy and Delores are full-time employees of Kingfisher. Nancy’s Social Secu-

rity number is 123-45-6789, and Delores’s Social Security number is 987-65-4321.

• Kingfisher is an accrual method, calendar year taxpayer. Inventories are determined

using FIFO and the lower of cost or market method. Kingfisher uses the straight-line

method of deprecation for book purposes and accelerated depreciation (MACRS)

for tax purposes.

• During 2012, the corporation distributed cash dividends of $64,000.

Kingfisher’s financial statements for 2012 are shown below.

Income Statement

Income

Gross sales $1,884,000

Sales returns and allowances (64,000)

Net sales $1,820,000

Cost of goods sold (736,000)

Income

Gross profit $1,084,000

Dividends received from stock

investments in less-than-20%-owned

U.S. corporations 9,000

Interest income

State bonds $2,500

Certificates of deposit 4,000 6,500

Total income $1,099,500

Expenses

Salaries—officers

Nancy Trout $150,000

Delores Lake 150,000 $300,000

Salaries—clerical and sales 232,000

Taxes (state, local, and payroll) 68,000

Repairs and maintenance 45,000

Interest expense:

Business loans $10,000

Loan to purchase state bonds 1,800 11,800

Advertising 5,000

Rental expense 38,000

Depreciation* 32,000