Form 1120 for kingfisher for tax year 2012

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.

 

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                                                                                                                                                       $1,084,000

Dividends received from stock

investments in less-than-20%-owned

U.S. corporations                                                                                                                                            9,000

Interest income

State bonds                                                        $2,500

Certificates of deposit                                    4,000                                                                            6,500

Total income                                                                                                                                                    $1,099,500

 

Expenses

Salaries—officers

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

Interest expense:

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                                     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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