{"id":12016,"date":"2021-10-28T12:48:31","date_gmt":"2021-10-28T12:48:31","guid":{"rendered":"https:\/\/assignmenttutors.net\/blog\/tax-returns-for-pet-kingdom-inc\/"},"modified":"2021-10-28T12:48:31","modified_gmt":"2021-10-28T12:48:31","slug":"tax-returns-for-pet-kingdom-inc","status":"publish","type":"post","link":"https:\/\/assignmenttutors.net\/blog\/tax-returns-for-pet-kingdom-inc\/","title":{"rendered":"Tax returns for pet kingdom, inc."},"content":{"rendered":"
\n

1. On November 1, 2005, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized as follows:<\/span><\/p>\n

\u2022 Pet Kingdom\u2019s business address is 1010 Northwest Parkway, Dallas, TX 75225; its telephone number is (214) 555-2211; and its e-mail address is [email\u00a0protected]<\/span><\/p>\n

\u2022 The employer identification number is 11-1111111, and the principal business activity code is 453910.<\/span><\/p>\n

\u2022 Janet and Kim each own 50% of the common stock; Janet is president and Kim is vice president of the company. No other class of stock is authorized.<\/span><\/p>\n

\u2022 Both Janet and Kim are full-time employees of Pet Kingdom. Janet\u2019s Social Security number is 123-45-6789, and Kim\u2019s Social Security number is 987-65-4321.<\/span><\/p>\n

\u2022 Pet Kingdom is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Pet Kingdom uses the straight-line method of depreciation for book purposes and accelerated depreciation (MACRS) for tax purposes.<\/span><\/p>\n

\u2022 During 2015, the corporation distributed cash dividends of $250,000.<\/span><\/p>\n

Pet Kingdom\u2019s financial statements for 2015 follow.<\/span><\/p>\n

Income Statement<\/span><\/p>\n

Income<\/span><\/p>\n

Gross sales $5,750,000<\/span><\/p>\n

Sales returns and allowances (200,000)<\/span><\/p>\n

Net sales $5,550,000<\/span><\/p>\n

Cost of goods sold (2,300,000)<\/span><\/p>\n

Gross profit $3,250,000<\/span><\/p>\n

Dividends received from stock investments in less-than- 20%-owned U.S. corporations 43,750<\/span><\/p>\n

Interest income:<\/span><\/p>\n

State bonds $15,000<\/span><\/p>\n

Certificates of deposit 20,000 35,000<\/span><\/p>\n

Total income $3,328,750 (continued)<\/span><\/p>\n

\u00a0Expenses<\/span><\/p>\n

Salaries\u2014officers:<\/span><\/p>\n

Janet Morton $262,500<\/span><\/p>\n

Kim Wong 262,500 $525,000<\/span><\/p>\n

Salaries\u2014clerical and sales 725,000<\/span><\/p>\n

Taxes (state, local, and payroll) 238,000<\/span><\/p>\n

Repairs and maintenance 140,000<\/span><\/p>\n

Interest expense:<\/span><\/p>\n

Loan to purchase state bonds $ 9,000<\/span><\/p>\n

Other business loans 207,000 216,000<\/span><\/p>\n

Advertising 58,000<\/span><\/p>\n

Rental expense 109,000<\/span><\/p>\n

Depreciation* 106,000<\/span><\/p>\n

Charitable contributions 38,000<\/span><\/p>\n

Employee benefit programs 60,000<\/span><\/p>\n

Premiums on term life insurance policies on lives of Janet Morton and Kim<\/span><\/p>\n

Wong; Pet Kingdom is the designated beneficiary 40,000<\/span><\/p>\n

Total expenses (2,255,000)<\/span><\/p>\n

Net income before taxes $1,073,750<\/span><\/p>\n

Federal income tax (356,023)<\/span><\/p>\n

Net income per books $ 717,727 * Depreciation for tax purposes is $136,000. You are not provided enough detailed data to complete a Form<\/span><\/p>\n

4562 (depreciation). If you solve this problem using H&R BLOCK Tax Software, enter the amount of depreciation on line 20 of Form 1120.<\/span><\/p>\n

Balance Sheet<\/span><\/p>\n

Assets January 1, 2015 December 31, 2015<\/span><\/p>\n

Cash $ 1,200,000 $ 1,037,750<\/span><\/p>\n

Trade notes and accounts receivable 2,062,500 2,147,000<\/span><\/p>\n

Inventories 2,750,000 3,030,000<\/span><\/p>\n

Stock investment 1,125,000 1,125,000<\/span><\/p>\n

State bonds 375,000 375,000<\/span><\/p>\n

Certificates of deposit 400,000 400,000<\/span><\/p>\n

Prepaid Federal tax \u20130\u2013 3,977<\/span><\/p>\n

Buildings and other depreciable assets 5,455,000 5,455,000<\/span><\/p>\n

Accumulated depreciation (606,000) (712,000)<\/span><\/p>\n

Land 812,500 812,500<\/span><\/p>\n

Other assets 140,000 128,500<\/span><\/p>\n

Total assets $13,714,000 $13,802,727<\/span><\/p>\n

Liabilities and Equity January 1, 2015 December 31, 2015<\/span><\/p>\n

Accounts payable $ 2,284,000 $ 1,975,000<\/span><\/p>\n

Other current liabilities 175,000 155,000<\/span><\/p>\n

Mortgages 4,625,000 4,575,000<\/span><\/p>\n

Capital stock 2,500,000 2,500,000<\/span><\/p>\n

Retained earnings 4,130,000 4,597,727<\/span><\/p>\n

Total liabilities and equity $13,714,000 $13,802,727<\/span><\/p>\n

During 2015, Pet Kingdom made estimated tax payments of $90,000 each quarter to the IRS. Prepare a Form 1120 for Pet Kingdom for tax year 2015. \u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

1. On November 1, 2005, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized as follows: \u2022 Pet Kingdom\u2019s business address is 1010 Northwest Parkway, Dallas, TX 75225; its telephone number is (214) 555-2211; and its e-mail address is [email\u00a0protected] \u2022 The […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":["post-12016","post","type-post","status-publish","format-standard","hentry","category-homework-help"],"_links":{"self":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/12016","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/comments?post=12016"}],"version-history":[{"count":0,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/12016\/revisions"}],"wp:attachment":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/media?parent=12016"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/categories?post=12016"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/tags?post=12016"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}