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 $15,2012,$ its date of incorporation. The following information was taken from the company's $2021$ 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.

January $1,2021$ December $31,2021$

Cash $ $47,840$ $ $?$

Accounts receivable $93,100123,104$

Inventories $9,6073,467$

Prepaid expenses $8,33317,582$

Building and equipment $138,203185,348$

Accumulated depreciation $(84,235)(?)$

Land $2,0002,000$

Total assets $$214,848$ $$844,422$

Accounts payable $ $42,500$ $ $72,300$

Notes payable $($less than $1$ year$)4,5002,100$

Notes payable $($more than $1$ year$)26,70024,300$

Capital stock $(100$ shares outstanding$)30,00030,000$

Retained earnings $$111,148?$

Total liabilities and capital $$214,848$ $$844,422$

Premium's accounting firm provides the following additional information.

Distributions to shareholders $($not reported on Form $1099-$DIV and

made based on percentage of ownership$)$:

$$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 $125,000$

Required:

Prepare Premium's Form $1120$S$,$ Additional Information $-$ Continuation Statement, and Schedule K$-1$s for John Parsons and George Smith, $560720$th Street, Cut and Shoot, TX $77303.$

Exercise $12-14($Algorithmic$)($LO$.6)$

Dion, an S shareholder, owned $20\%$ of MeadowBrook's stock for $292$ days and $25\%$ for the remaining $73$ days in the year.

Using the required per$-$day allocation method, compute Dion's share of the following S corporation items.

Assume $365$ days in a year. Schedule K$-1$ for George Smith

Prepare the Schedule K$-1$ for George Smith.

If required, round amounts to the nearest dollar.

Note:

Box $12$: Code A is is to report cash charitable contributions.

Box $16$: Code $C$ is used to report nondeductible expenses, and Code $D$ is used to report distributions not reported on Form $1099-$DIV.

Box $17$: Code A is used to report Investment income, Code AC is used to report gross receipts for Section $448($c$)$ purposes.

Box $17$: Code $V$ is used to report information required for the QBI deduction. You are not required to provide a statement of the QBI items.

Final K$-1$

Amended K$-1$

OMB No$.1545-0123$

Schedule K$-1$

$($Form $1120-$S$)$

Department of the Treasury

Internal Revenue Service

beginning

Shareholder's Share of Income, Deductions,

Credits, etc.

Part I Information About the Corporation

A Corporation's employer identification number

$11-1111120$

B Corporation's name, address, city, state, and ZIP code

Premium, Inc.

$100516$th Street

Cut and Shoot, TX $77303$

C IRS Center where corporation filed return

e$-$file Statement A$-$QBI Pass$-$through Entity Reporting

Complete Statement A$-$QBI Pass$-$through Entity Reporting $($Schedule K$-1,$ Box $17,$ Code V$)$ for Premium, Inc.

Statement A$-$QBI Pass$-$through Entity Reporting $($Schedule K$-1,$ Box $17,$ Code V$)$

QBI or qualified PTP items subject to partner$-$specific determinations: