Prepare a partnership return and the appropriate K-1s for W & M Partnership. William Winston (SSN: 226-00-4265) lives at 53 Mantis Road, Your City, Your State - Your Zip. He operates Lovely Lady Beauty Salon at 1096 Lovely Lady Lane, Your City, Your State - Your Zip. Mr. Winston started his business as a sole proprietor. He has discovered that he cannot do it all himself and, with Mary Martin (SSN: 111-99-8989), they formed a partnership. Mary's address is 9478 Ivy Leaf Way, Your City, Your State - Your Zip. When the partnership was formed on January 15, 2022, William supplied all equipment and inventory, and Mary supplied $5,000 cash for working capital. William and Mary agreed that all future profits and losses would be split equally. William will be the tax matters partner. The partnership is cash basis and uses calendar year reporting. Its EIN is 35-1224444. W & M Partnership Financial Information Item Amount Gross sales $69,327 Advertising $ 375 Commissions $ 400 Supplies $ 685 Business personal property tax $ 245 Wages (employees) $14,530 Rentals of business property $ 7,100 Business insurance premiums $ 596 License fees $ 350 Travel expenses $ 800 Bank charges $ 789 Phone expenses $ 894 FUTA/FICA taxes $ 2,100 Depreciation expenses $ 602 Section 179 deduction $ 1,145 Inventory Information Contributed inventory $ 2,800 Inventory purchased $13,940 Ending inventory $ 2,000 Personal Vehicle Logbook Information Date placed into service 1/15/2022 Business miles for the tax year 4,240 Commuting miles for the tax year 1,946 Personal miles for the tax year 2,110 Standard mileage rate 1/1-6/30 $0.585 Standard mileage rate 7/1-12/31 $0.625 * Assume mileage was incurred evenly throughout the year. ** Company policy is to reimburse business mileage at the standard rate. Copyright 2023, The Income Tax School, Inc. - All Rights Reserved SQLA - 6.10 Mr. Winston purchased the following equipment, all of which was used 100% for business. Item Purchase Date Cost Office furniture 1/15/22 $1,032 Fixtures 1/15/22 $ 167 Store sign 1/15/22 $ 250 Card reader 1/15/22 $ 458 Display case 1/15/22 $ 225 Telephone 1/15/22 $ 218 Mirrors * 1/15/22 $ 85 Manicure table * 1/15/22 $ 817 Computer 1/15/22 $ 503 Facial chair 1/15/22 $ 487 Adding machine/calculator * 1/15/22 $ 80 Manicure chair * 1/15/22 $ 163 Printer 1/15/22 $ 285 * Mr. Winston wishes to expense these items under section 179. Note: Do not use special depreciation for any of the assets. What is the adjusted basis for William and for Mary at the time the partnership was formed? Prepare a balance sheet for W & M Partnership as of 12/31/22. . Answer the following question based on the scenario in Learning Activity 5. What is the adjusted basis of the capital account for William at the time the partnership was formed? a) $4,770 b) $2,800 c) $7,570 d) $5,000 15. Answer the following question based on the scenario in Learning Activity 5. What is the adjusted basis of the capital account for Mary at the time the partnership was formed? a) $ 0 b) $ 7,570 c) $12,570 d) $ 5,000 16. Answer the following question based on the scenario in Learning Activity 5. What is the amount of total assets based on the balance sheet at 12/31/2022? a) $ 3,023 b) $33,980 c) $ 4,770 d) $28,957 17. Answer the following question based on the scenario in Learning Activity 5. What is the cash amount on the balance sheet for W & M Partnership at 12/31/2022? a) $ 5,000 b) $21,410 c) $26,410 d) $28,957 18. Answer the following question based on the scenario in Learning Activity 5. What is the gross profit from Form 1065? a) $69,327 b) $54,587 c) $55,353 d) $22,759 19. Answer the following question based on the scenario in Learning Activity 5. What is the ordinary business income (loss) from Form 1065? a) $69,327 b) $22,555 c) $32,032 d) $54,587 20. Answer the following question based on the scenario in Learning Activity 5. What is the ordinary business income (loss) from William's Schedule K-1? a) $16,016 b) $27,294 c) $34,664 d) $11,278