Required information Comprehensive Problem 22-86 (Algo) (LO 22-1, LO 22-2, LO 22-3, LO 22-4, LO 22-5, LO 22-6) While James Craig and his former classmate Paul Dolittle both studied accounting at school, they ended up pursuing careers in professional cake decorating. Their company, Good to Eat (GTE), specializes in custom-sculpted cakes for weddings, birthdays, and other celebrations. James and Paul formed the business at the beginning of 2021, and each contributed $260,000 in exchange for a 50 percent ownership interest. GTE also borrowed $1,040,000 from a local bank. Both James and Paul had to personally guarantee the loan. Both owners provide significant services for the business. The following information pertains to GTE's 2021 activities: - GTE uses the cash method of accounting (for both book and tax purposes) and reports income on a calendar-year basis. - GTE received $1,500,000 of sales revenue and reported $700,000 of cost of goods sold (it did not have any ending inventory). - GTE paid $135,000 compensation to James, $135,000 compensation to Paul, and $145,000 of compensation to other employees (assume these amounts include applicable payroll taxes, if any). - GTE paid $36,000 of rent for a building and equipment, $41,000 for advertising, $72,800 in interest expense, $6,100 for utilities, and $4,100 for supplies. - GTE contributed $15,500 to charity. - GTE received a $5,200 qualified dividend from a great stock investment (it owned 2 percent of the corporation distributing the dividend), and it recognized $3,600 in short-term capital gain when it sold some of the stock. - On December 1, 2021, GTE distributed $41,000 to James and $41,000 to Paul. - GTE has qualified property of $321,000 (unadjusted basis). (Leave no answer blank. Enter zero if applicable. Enter N/A if not applicable.) Comprehensive Problem 22-86 (Algo) Part c-1 c-1. Assume James and Paul formed GTE as a C corporation. Complete GTE's Form 1120, page 1. Use 2021 tax rules regardless of year on tax form. Employer identification number: 58-1111111 35 Amount owed. If line 33 is smaller than the total of lines 31,32 , and 34 , enter amount owed 36 Overpayment. If line 33 is larger than the total of lines 31,32 , and 34 , enter amount overpaid 37 Enter amount from line 36 you want Credited to 2021 estimated tax Refunded \begin{tabular}{|l|l|} \hline 35 & 0 \\ \hline 36 & \\ \hline 37 & \\ \hline \end{tabular} Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, THIS FORM IS A SIMULATION OF AN OFFICIAL U.S. TAX FORM. IT IS NOT THE OFFICIAL FORM IT SELF. DO NOT USE THIS FORM FOR TAX FILINGS OR FOR ANY PURPOSE OTHER THAN EDUCATIONAL. @ 2021 McGraw-Hill Education