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Book/movie review
22/08/2022
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 number is (218) 555-2211; and its e-mail address is [email protected]
• 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 Security 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
Dividends received from stock
investments in less-than-20%-owned
U.S. corporations
Interest income
State bonds
$2,500
Certificates of deposit
4,000
Total income
Expenses
Salaries—officers
Nancy Trout
Delores Lake
Salaries—clerical and sales
Taxes (state, local, and payroll)
Repairs and maintenance
Interest expense:
$150,000
150,000
$1,084,000
9,000
6,500
$1,099,500
$300,000
232,000
68,000
45,000
Business loans
$10,000
Loan to purchase state bonds
1,800
11,800
Advertising
5,000
Rental expense
38,000
Depreciation*
32,000
Charitable contributions
12,000
Employee benefit programs
19,000
Premiums on term life insurance policies
on lives of Nancy Trout and Delores
Lake; Kingfisher is the designated
beneficiary
12,800
Legal and accounting services
16,000
Total expenses
(791,600)
Net income before taxes
$ 307,900
Federal income tax
(105,593)
Net income per books
$ 202,307
* You are not provided enough detailed information to complete a Form 4562 (depreciation). If
you solve
this problem using H&R BLOCK At Home, enter the amount of deprecation on line 20 of Form
1120.
Balance Sheet
Assets
January 1, 2012 December 31, 2012
Cash
$384,000
$287,780
Trade notes and accounts receivable 547,000
668,000
Inventories
480,000
569,600
State bonds
60,000
60,000
Federal income tax refund
–0–
2,407
Certificates of deposit
80,000
80,000
Stock investments
100,000
100,000
Building and other depreciable assets 192,000
192,000
Accumulated depreciation
(71,040)
(103,040)
Land
116,000
116,000
Other assets
2,880
1,600
Total assets
$1,890,840
$1,974,347
Liabilities and Equity
Accounts payable
Other current liabilities
Mortgages
Capital stock
Retained earnings
Total liabilities and equity
January 1, 2012 December 31, 2012
$240,000
$220,440
64,240
32,000
168,000
165,000
400,000
400,000
1,018,600
1,156,907
$1,890,840
$1,974,347
During 2012, Kingfisher made estimated tax payments of $27,000 each quarter to the
IRS. Prepare a Form 1120 for Kingfisher for tax year 2012. Suggested software: H&R
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