Note: This problem is for the 2021 tax year. John Parsons (123-45-6781) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111120), a candy company located at 1005 16th Street, Cut and Shoot, TX 77303. Premium's S election was made on January 15, 2012, its date of incorporation. The following information was taken from the company's 2021 income statement. Interest income $ 100,000Gross sales receipts 2,410,000Beginning inventory 9,607Direct labor (203,102)Direct materials purchased (278,143)Direct other costs (249,356)Ending inventory 3,467Salaries and wages (442,103)Officers' salaries ($75,000 each to Parsons and Smith) (150,000)Repairs (206,106)Depreciation expense, tax and book (15,254)Interest expense (35,222)Rent expense (operating) (40,000)Taxes (65,101)Charitable contributions (cash) (20,000)Advertising expenses (20,000)Payroll penalties (15,000)Other deductions (59,899)Book income 704,574A comparative balance sheet appears below. January 1, 2021 December 31, 2021Cash $ 47,840 $ ?Accounts receivable 93,100 123,104Inventories 9,607 3,467Prepaid expenses 8,333 17,582Building and equipment 138,203 185,348 Accumulated depreciation (84,235) (?)Land 2,000 2,000Total assets $214,848 $844,422Accounts payable $ 42,500 $ 72,300Notes payable (less than 1 year) 4,500 2,100Notes payable (more than 1 year) 26,700 24,300Capital stock (100 shares outstanding) 30,000 30,000Retained earnings $111,148 ?Total liabilities and capital $214,848 $844,422 Premium's accounting firm provides the following additional information.Distributions to shareholders (not reported on Form 1099-DIV andmade based on percentage of ownership): $100,000Beginning balance, Accumulated adjustments account: 111,148Ordinary business income for QBI: 639,574W-2 wages for QBI: 795,205UBIA of qualified property 125,000Required:Prepare Premium's Form 1120S, Additional Information - Continuation Statement, and Schedule K-1s for John Parsons and George Smith, 5607 20th Street, Cut and Shoot, TX 77303. Complete Forms:1120-s1125-ASchedule K-1 for JohnSchedule K-1 for GeorgeStatement A—QBI Pass-through Entity Reporting JohnStatement A—QBI Pass-through Entity Reporting George1125-EFederal Statements
Note: This problem is for the 2021 tax year.
John Parsons (123-45-6781) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111120), a candy company located at 1005 16th Street, Cut and Shoot, TX 77303. Premium's S election was made on January 15, 2012, its date of incorporation. The following information was taken from the company's 2021 income statement.
Interest income $ 100,000
Gross sales receipts 2,410,000
Beginning inventory 9,607
Direct labor (203,102)
Direct materials purchased (278,143)
Direct other costs (249,356)
Ending inventory 3,467
Salaries and wages (442,103)
Officers' salaries ($75,000 each to Parsons and Smith) (150,000)
Repairs (206,106)
Interest expense (35,222)
Rent expense (operating) (40,000)
Taxes (65,101)
Charitable contributions (cash) (20,000)
Advertising expenses (20,000)
Payroll penalties (15,000)
Other deductions (59,899)
Book income 704,574
A comparative balance sheet appears below.
January 1, 2021 December 31, 2021
Cash $ 47,840 $ ?
Inventories 9,607 3,467
Prepaid expenses 8,333 17,582
Building and equipment 138,203 185,348
Accumulated depreciation (84,235) (?)
Land 2,000 2,000
Total assets $214,848 $844,422
Accounts payable $ 42,500 $ 72,300
Notes payable (less than 1 year) 4,500 2,100
Notes payable (more than 1 year) 26,700 24,300
Capital stock (100 shares outstanding) 30,000 30,000
Retained earnings $111,148 ?
Total liabilities and capital $214,848 $844,422
Premium's accounting firm provides the following additional information.
Distributions to shareholders (not reported on Form 1099-DIV and
made based on percentage of ownership):
$100,000
Beginning balance, Accumulated adjustments account: 111,148
Ordinary business income for QBI: 639,574
W-2 wages for QBI: 795,205
UBIA of qualified property 125,000
Required:
Prepare Premium's Form 1120S, Additional Information - Continuation Statement, and Schedule K-1s for John Parsons and George Smith, 5607 20th Street, Cut and Shoot, TX 77303.
Complete Forms:
1120-s
1125-A
Schedule K-1 for John
Schedule K-1 for George
Statement A—QBI Pass-through Entity Reporting John
Statement A—QBI Pass-through Entity Reporting George
1125-E
Federal Statements
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
