Univex is a calendar year, accrual basis retail business. Its financial statements provide the following information for the year:
Revenues from sales of goods …………………………$ 783,200
Cost of goods sold (FIFO) ……………………………… (417,500)
Gross profit ……………………………………………..$ 365,700
Interest income from certificates of deposit …………….. 1,300
Dividend income from IBM stock ……………………… 6,720
Gain from sale of IBM stock purchased in 2000 ……….. 8,615
Bad debt expense ……………………………………….. 3,900
Administrative salaries and wages ……………………… 153,400
Business and employment taxes ………………………… 31,000
Interest expense on debt incurred to buy inventory …….. 5,100
Advertising ……………………………………………… 7,000
Meals and entertainment ………………………………. 3,780
Property insurance premiums …………………………. 4,300
Depreciation …………………………………………… 10,800
Repairs and maintenance ……………………………… 18,700
Supplies ……………………………………………….. 4,120
Utilities ………………………………………………… 21,000
Contributions to charity ………………………………… 5,000
Univex’s records reveal the following facts:
• Bad debt expense equals the addition to an allowance for bad debts. Actual write-offs of uncollectible accounts totaled $2,000.
• MACRS depreciation for the year was $21,240.
• Univex made no dispositions of operating assets.
• The owners did not receive any compensation or withdraw any funds from Univex.
• Univex is entitled to an $1,800 general business credit.
a. Assume Univex is a sole proprietorship. Compute net profit on Schedule C, Form 1040, and identify the items from Univex’s records that do not appear on Schedule
c. Complete Schedule C, Form 1040.
b. Assume Univex is an LLC. Compute ordinary income on page 1, Form 1065, and complete Schedule K, Form 1065.
c. Assume Univex is a corporation operating in a state without a corporate in-come tax. Univex made estimated federal tax payments totaling $23,500. Compute taxable income on page 1, Form 1120, calculate Univex’s federal income tax, and complete page 1, Form 1120, and Schedule M-1, page 5, Form 1120.