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Appendix E: Problem 3-C Corporation (Form 1120) On November 1, 2005, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet...

Question Clarification: Prepare a Form 1120 for Pet Kingdom for tax year 2009. Suggested software: H&R BLOCK At Home.

Dear tutor, this is my assignment attachment. Please have a look. I am in a hurry because I need to hand over this tomorrow morning.

If you are not able to prepare the Form 1120, please write me the detailed solution to how to calculate the final tax.
4 pages Problem_C-Form_1120.docx

Appendix E: Problem 3-C Corporation (Form 1120)
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:
1. Pet Kingdom’s business address is 1010 Northwest Parkway, Dallas, TX 75225; its
telephone number is (214) 555-2211; and its e-mail address is [email protected]
2. The employer identification number is 11-1111111, and the principal business activity
code is 453910.
3. Janet and Kim each owned 50% of the common stock; Janet is president and Kim is vice
president of the company. No other class of stock is authorized.
4. Both Janet and Kim are full- time employees of Pet Kingdom. Janet’ Social Security
number is 123-45-6789 and Kim’s Social Security number is 978-65-4321.
5. Pet Kingdom is an accrual method, calendar year tax payer. 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.
6. During 2009, the corporation distributed cash dividends of $200,000.
Pet Kingdom’s Financial Statements for 2009 are shown below. Income Statement
Income $4,600,000 Gross Sales
Sales Returns and
Allowances (160,000)
$4,440,000 Net Sales (1,840,000) Cost of Goods Sold $2,600,000 Gross Profit
Dividends Received
from stock
investments
in less-than-20%owned U.S.
Corporations 35,000 Interest Income
State Bonds
Certificates of
Deposit 12,000
16,000 28,000 Total Income $2,663,000 Expenses
Salaries-Officers
Janet Morton
Kim Wong
Salaries-clerical and
sales
Taxes (state, local and
payroll)
Repairs and
maintenance
Interest Expense
Loan to purchase
state bonds
Other business loans $210,000
210,000 $420,000
580,000
190,000
112,000 $7,000
174,000 1810,000 Advertising 46,000 Rental Expense 86,000 Depreciation*
Charitable
Contributions
Employee Benefit
Programs
Premiums on term life
insurance policies on
lives of Janet and 80,000
30,000
48,000
32,000 Kim; Pet Kingdom is
the designated
beneficiary
Total Expenses
Net income before
taxes $1,805,000 Federal Income tax
Net income per
books (282,370) $858,000 $575,630 *Depreciation for tax purposes is $110,000. You are not provided enough detailed data to
complete a form 4562(depreciation). If you solve this problem using J&R BLOCK At Home,
enter the amount of depreciation on line 20 of Form 1120. Assets
Cash
Trade notes and accounts receivable
Inventories
Stock investment
State bonds
Certificates of deposit
Prepaid federal tax
Buildings and other depreciable assets
Accumulated depreciation
Land
Other assets
Total assets
Liabilities and Equity
Accounts payable
Other current liabilities
Mortgages
Capital stock
Retained earnings
Total liabilities and equity Balance Sheet
January 1, 2009
$
960,000
1,650,000
2,200,000
900,000
300, 000
350,000
0
4,365,000
(485,000)
650,000
112,000
11,002,000
January 1, 2009
$
1,850,000
142,000
3,700,000
2,000,000
3,310,000
$
11,002,000 $ December 31, 2009
680,000
1,838,000
2,424,000
900,000
300,000
350,000
3,630
4,365,000
(565,000)
650,000
102,800
11,048,430
December 31, 2009
1,579,800
123,000
3,660,000
2,000,000
3,685,630
11,048,430 During 2009, Pet Kingdom made estimated tax payments of $71,500 each quarter to the IRS.
Prepare a Form 1120 for Pet Kingdom for tax year 2009. Suggested software: H&R BLOCK At
Home.

This question was asked on Mar 21, 2011.

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