John Parsons (123-45-6781) 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, 2010, its date of incorporation. The following information was taken from the company's 2016 income statement. Premium's book income for the year was $704,574.

Interest income ................................................................ $ 100,000

Gross sales receipts ........................................................... 2,410,000

Beginning inventory ................................................................ 9,607

Direct labor ................................................................ ... (203,102)

Direct materials purchased ................................................... (278,143)

Direct other costs .............................................................. (249,356)

Ending inventory .................................................................... 3,467

Salaries and wages ............................................................. (442,103)

Officers' salaries ($75,000 each to Parsons and Smith) ................... (150,000)

Repairs ............................................................................. (206,106)

Depreciation expense, tax and book ............................................. (15,254)

Interest expense .................................................................... (35,222)

Rent expense (operating) ........................................................... (40,000)

Taxes .................................................................................. (65,101)

Charitable contributions (cash) .................................................... (20,000)

Advertising expenses ................................................................ (20,000)

Payroll penalties ...................................................................... (15,000)

Other deductions .................................................................... (59,899)

A 2016 comparative balance sheet appears below.

Premium's accounting firm provides the following additional information.
Cash distributions to shareholders .................................... $100,000
Beginning balance, accumulated
adjustments account ..................................................... $111,148
Using the preceding information, prepare a complete Form 1120S 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 Form 4562. If any information is missing, make realistic assumptions?

Transcribed Image Text:

January 1 December 31 $ 47,840 Cash Accounts receivable 93,100 123,104 Inventories 9,607 З467 17,582 Prepaid expenses 8,333 138,203 185,348 Building and equipment Accumulated depreciation (84,235) (?) 2,000 $214,848 Land 2,000 $844422 Total assets $ 42,500 $ 72,300 Accounts payable Notes payable (less than 1 year) 4,500 2,100 Notes payable (more than 1 year) Capital stock Retained earnings 26,700 24,300 30,000 30,000 111,148 ? Total liabilities and capital $214,848 $844,422