John Parsons (123-45-6871) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111111), a candy company located at 1005 16th Street, Cut and Shoot, TX 77303. Premium’s S election was made on January 15, 2011, its date of incorporation. The following information was taken from the company’s 2018 income statement. Premium’s book income for the year was $704,574Interest Income$100,000Gross Sales Receipts2,410,000Beginning Inventory9,607Direct Labor(203,102)Direct Materials purchased(278,143)Direct other costs(249,356)Ending Inventory3,467Salaries and wages(442,103)Officers salaries(150,000)Repairs (206,106)Depreciation expenses(15,254)Interest expenses(35,222)Rent expenses (operating)(40,000)Taxes (65,101)Charitable contribution (Cash)(20,000)Advertising expenses(20,000)Payroll penalties(15,000)Other deductions(59,899)Book income$704,574A 2018 comparative balance sheet appears below. 1-Jan31-Dec Cash$47,840$ ?Accounts Receivable93,100123,104Inventories9,6073,467Prepaid expenses8,33317,582Building and equipment138,203185,348Accumulated depreciation-84,235(?)Land2,0002,000 Total liabilities and capita214,848$844,422 Accounts payable42,50072,300 Notes Payable (Less than 1 year)4,5002,100 Notes payable (more than 1 year)26,70024,300 Capital stock30,00030,000 Retained earnings111,148? Total liabilities and capital214,848$844,422Premium’s accounting firm provides the following additional information.Cash distributions to shareholders $100,000Beginning balance, accumulated adjusted account $111,148Using the preceding information, prepare a complete Form 1120s (Links to an external site.) and Schedule K-1s for John Parsons and George Smith, both of whom live at 5607 20th Street, Cut and Shoot, TX 77303. Do not complete the Forms 1125-A (Links to an external site.), 1125-E (Links to an external site.), and 4562 (Links to an external site.). If any information is missing, make realistic assumptions.
