$1.$ Tax Forms Problem

John Parsons $(123-45-6781)$ and George Smith $(123-45-6782)$ are $70\%$ and $30\%$ owners, respectively, of Premium, Inc. $(11-1111120),$ a candy company located at $100516$th Street, Cut and Shoot, TX $77303.$ Premium$$s S election was made on January $15,2014,$ its date of incorporation. The following information was taken from the company$$s $2023$ income statement:

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 $(59,899)$

Book income $704,574$

A comparative balance sheet appears below.

Details

A comparative balance sheet comparing January $1,2023$ with December $31,2023.$ Row one. Cash. January $1,2023.47,840$ dollars. December $31,2023.$ Unknown amount. Row two. Accounts receivable. January $1,2023.93,100$ dollars. December $31,2023.$ December $31,2023.123,104$ dollars. Row three. Inventories. January $1,2023.9,607$ dollars. December $31,2023.3,467$ dollars. Row four. Prepaid expenses. January $1,2023.8,333$ dollars. December $31,2023.17,582$ dollars. Row five. Building and equipment. January $1,2023.138,203$ dollars. December $31,2023.185,348$ dollars. Row six. Accumulated depreciation. January $1,2023.$ Less $84,235$ dollars. December $31,2023.$ Unknown amount. Row seven. Land. January $1,2023.2,000$ dollars. December $31,2023.2,000$ dollars. Row eight. Total assets. January $1,2023.214,848$ dollars. December $31,2023.844,422$ dollars. Row nine. Accounts payable. January $1,202342,500$ dollars. December $31,2023.72,300$ dollars. Row ten. Notes payable for less than $1$ year. January $1,2023.4,500$ dollars. December $31,2023.2,100$ dollars. Row eleven. Notes payable for more than $1$ year. January $1,2023.26,700$ dollars. December $31,2023.24,300$ dollars. Row twelve. Capital stock. January $1,2023.30,000$ dollars. December $31,2023.30,000$ dollars. Row thirteen. Retained earnings. January $1,2023.111,148$ dollars. December $31,2023.$ Unknown amount. Row fourteen. Total liabilities and capital. January $1,2023.214,848$ dollars. December $31,2023.844,422$ dollars.

The corporation did not own or use any digital assets during the year. Premium$$s accounting firm provides the following additional information:

Distributions to shareholders $$100,000$

Beginning balance, Accumulated adjustments account $111,148$

Ordinary business income for QBI $639,574$

W$2$ wages for QBI $795,205$

UBIA of qualified property $125,000$

Complete the $2023$ Form $1120$S for Premium, Inc., and Schedule K$1$s for John Parsons and George Smith, $560720$th Street, Cut and Shoot, TX $77303.$

Required

Prepare Schedule K$,$ M$-1,$ M$-2,$ K$-1($K$-1$ for John Parsons$)$

Additional Information

$1120$S page $1$ line $21$ ordinary business income $639,574$

Schedule L

Schedule K complete the following lines:

$1,4,12$a$,16$c$,16$d$,17$a$,18$

K$-1($John Parsons$)$ complete K$-1,$ including the following lines:

$1,4,12$a$,16$c$,16$d$,17$a$,17$ac$,17$ v $($QBI$,$ W$-2$ wages, UBIA$)$

Schedule M$-2-$ line $8($a$)715,722($b$)0($c $)0$

Lines $3$ & $5($a$)$ have separately stated and nondeductibles

Schedule M$-2$ line $1$: $($a$)111,148$; line $8$: $($a$)715,722$

Schedule M$-1$ line $1$: $704,574$; Line $8$: $719,574$