Note: This problem is for the $2023$ tax year.

On November $1,2012,$ Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized as follows:

Pet Kingdom's business address is $1010$ Northwest Parkway, Dallas, TX $75225$; its telephone number is $(214)555-2211$; and its e$-$mail address is petkingdom@pki.com.

The employer identification number is $11-1111112,$ and the principal business activity code is $453910.$

Janet and Kim each own $50\%$ of the common stock; Janet is president and Kim is vice president of the company. No other class of stock is authorized.

Both Janet and Kim are full$-$time employees of Pet Kingdom. Janet's Social Security number is $123-45-6788,$ and Kim's Social Security number is $123-45-6787.$

Pet Kingdom is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Pet Kingdom uses the straight$-$line method of depreciation for book purposes and accelerated depreciation $($MACRS$)$ for tax purposes.

During $2023,$ the corporation distributed cash dividends of $$250,000.$

The corporation did not own or use any digital assets during the year.

Pet Kingdom's financial statements for $2023$ are shown below.

Income StatementIncomeGross sales$$5,750,000$Sales returns and allowances$(200,000)$Net sales$$5,550,000$Cost of goods sold$(2,300,000)$Gross profit$$3,250,000$Dividends received from stockinvestments in less$-$than$-20\%-$

owned U$.$S$.$ corporations$43,750$Interest income:State bonds$$15,000$Certificates of deposit$20,00035,000$Total income$$3,328,750$ExpensesSalaries$$officers:Janet Morton$$262,500$Kim Wong$262,500$$$525,000$Salaries$$clerical and sales$725,000$Taxes $($state$,$ local, and payroll$)238,000$Repairs and maintenance$140,000$Interest expense:Loan to purchase state bonds$$9,000$Other business loans$207,000216,000$Advertising$58,000$Rental expense$109,000$Depreciation$*106,000$Charitable contributions $($cash$)38,000$Employee benefit programs$60,000$Premiums on term life insurancepolicies on lives of Janet Morton and

Kim Wong; Pet Kingdom is the

designated beneficiary$40,000$Total expenses$(2,255,000)$Net income before taxes$$1,073,750$Federal income tax$(221,734)$Net income per books$$852,016*$ Depreciation for tax purposes is $$136,000.$ You are not provided enough detailed data to complete a Form $4562($depreciation$).$ If you solve this problem using Intuit ProConnect, enter the amount of depreciation on line $20$ of Form $1120.$

Balance SheetAssetsJanuary $1,2023$December $31,2023$Cash$$1,200,000$$$1,039,461$Trade notes and accounts receivable$2,062,5002,147,000$Inventories$2,750,0003,030,000$Stock investment$1,125,0001,125,000$State bonds$375,000375,000$Certificates of deposit$400,000400,000$Prepaid Federal tax$02,266$Buildings and other depreciable assets$5,455,0005,455,000$Accumulated depreciation$(606,000)(712,000)$Land$812,500812,500$Other assets$140,000128,500$Total assets$$13,714,000$$$13,802,727$Liabilities and EquityJanuary $1,2023$December $31,2023$Accounts payable$$2,284,000$$$1,840,711$Other current liabilities$175,000155,000$Mortgages$4,625,0004,575,000$Capital stock$2,500,0002,500,000$Retained earnings$4,130,0004,732,016$Total liabilities and equity$$13,714,000$$$13,802,727$

Required:

During $2023,$ Pet Kingdom made estimated tax payments of $$56,000$ each quarter to the IRS. Prepare Pet Kingdom's corporate tax return for tax year $2023$ using Form $1120($and any other appropriate forms and schedules$).$

If an amount box does not require an entry or the answer is zero, enter $"0".$

Enter all amounts as positive numbers, unless otherwise instructed.

If required, round amounts to the nearest dollar.

Make realistic assumptions about any missing data. Federal Statements

Complete Federal Statements for Pet Kingdom.

Statement $2$

Form $1120,$ Schedule L$,$ Line $9$

Other Investments Form $1125-$E

Prepare Form $1125-$E for Pet Kingdom for tax year $2023.$

Note: Complete Form $1125-$E only if total receipts are $\backslash (\backslash$$ $500,000\backslash )$ or more. See instructions for definition of total receipts.

$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|$c$|$c$|\}$

$\backslash$hline $\backslash$multirow$\{2\}\{*\}\{1($a$)$ Name of officer$\}$ & $\backslash$multirow$[$t$]\{2\}\{*\}\{($b$)$ Social security number$\}$ & $\backslash$multirow$[$t$]\{2\}\{*\}\{($c$)$ Percent of time devoted to business$\}$ & $\backslash$multicolumn$\{2\}\{|$l$|\}\{$Percent of stock owned$\}$ & $\backslash$multirow$[$t$]\{2\}\{*\}\{($f$)$ Amount of compensation$\}\backslash \backslash$

$\backslash$hline & & & $($d$)$ Common & $($e$)$ Preferred & $\backslash \backslash$

$\backslash$hline Janet Morton & $123-45-6788$ & $\backslash [$

$\backslash$square $\backslash \%$

$\backslash ]$ & $\backslash (\backslash$square $\backslash \%\backslash )$ & $\backslash$begin$\{$tabular$\}\{$rr$\}$

$\backslash$hline $\backslash$& $\backslash (\backslash$checkmark $\backslash )\backslash \backslash$

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$\backslash$end$\{$tabular$\}$ & $\backslash \backslash$

$\backslash$hline Kim Wong & $123-45-6787$ & $\backslash \%$ & $\backslash \%$ & $\backslash (\backslash$begin$\{$array$\}\{$rr$\}0\backslash$& $\backslash$checkmark $\backslash \backslash \backslash$& $\backslash \%\backslash$end$\{$array$\}\backslash )$ & $\backslash \backslash$

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