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]
• 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.
Gross sales $1,884,000
Sales returns and allowances (64,000)
Net sales $1,820,000
Cost of goods sold (736,000)
Gross profit $1,084,000
Dividends received from stock
investments in less-than-20%-owned
U.S. corporations 9,000
State bonds $2,500
Certificates of deposit 4,000 6,500
Total income $1,099,500
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
Business loans $10,000
Loan to purchase state bonds 1,800 11,800
Rental expense 38,000
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
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.
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 January 1, 2012 December 31, 2012
Accounts payable $240,000 $220,440
Other current liabilities 64,240 32,000
Mortgages 168,000 165,000
Capital stock 400,000 400,000
Retained earnings 1,018,600 1,156,907
Total liabilities and equity $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
BLOCK At Home.
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