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Bad Debts: For tax purposes, the corporation uses the direct write-off method of deducting bad debts. For book purposes, the corporation uses an allowance for doubtful accounts. During 2017, the corporation charged $34,000 to the allowance account, such amount representing actual write-offs for 2017. Additional information for Schedule K: 1b 2a b 3 4a b 5a b 6-7 Accrual 451140 Retail Sales Self-Protection Gear No No Yes, omit Schedule G No No No 8 9 10 11 12 Do not check box Fill in the correct amount 3 Do not check box Not applicable Store building Equipment 1 Equipment 2d Trucks 13-14 No 15a No $ 75,890 112,540 225,080 52,000 b Do not check box Capital Gains and Losses: The corporation sold 100 shares of Shield Corp. common stock on October 7, 2017 for $125,000. The corporation acquired the stock on December 15, 2016 for $95,000. The corpor tion also sold 75 shares of Metro Corp common stock on June 17, 2017 for $110,000. The corporation acquired this stock on September 18, 2015 for $117,000. The corporation has a $10,000 capital loss carryover from 2016. These transactions were not reported to the corporation on Form 1099-B. Fixed Assets and Depreciation: 16-19 No Book: The corporation uses straight-line deprecation over the useful lives of the assets as follows: store building, 50 years; equipment, ten years; and trucks, five years. The corporation takes a half- year s depreciation in the year of acquisition and the year of disposition and assumes no salvage value. The book financial statements reflect these calculations. Tax: All assets are MACRS property as follows: store building, 39-year non-residential real property; equipment, seven-year property; and trucks, five-year property. The corporation acquired the store building for $1 million and placed it in services on January 2, 2014. The corporation acquired two pieces of equipment for $200,000 (Equipment 1) and $400,000 (Equipment 2) and placed them in service on January 2, 2014. The corporation acquired the trucks for $100,000 and placed them in service on July 18, 2015. The trucks are not listed property and are no subject to the limitation on luxury automobiles. The corporation did not make the expensing election under Sec. 179 or take bonus depreciation on any property acquired before 2017. Accumulated depreciation through December 31, 2016 on the properties is as follows: The unaudited GAAP income statement for 2017 is as follows: Sales Returns Net sales Beginning inventory Purchases Ending Inventory Cost of goods sold Gross profit Expenses: Depreciation Repairs Insurance Net premium-Officers life insurance Officers compensation Other salaries Utilities Advertising Legal and accounting fees Charitable contributions Payroll taxes Interest Expense Bad debt expense Total expenses Gain on Sale of equipment Interest on municpal bonds Net gain on stock sales Dividend income Net income before income taxes Federal income tax expense State income tax expense Net income Other Information: $ 2,125,000 4,675,000 (2,975,000) $ 115,000 17,680 46,750 25,500 552,500 340,000 61,200 40,800 42,500 25,500 52,700 178,500 38,750 $ $ $ $ $ $ 8,500,000 (212,500) 8,287,500 (3,825,000) 4,462,500 $ (1,536,880) 90,000 4,250 The corporations s tax rate in 2017 was 34%. The corporation s activities do not qualify for the U.S. production activities deduction. Ignore the AMT and accumulated earnings tax. The corporation received dividends from taxable, domestic corporations, the stock of which Banner owns less than 20%. The corporation paid $ 85,000 in cash dividends to its shareholders during the year and charged the payment directly to retained earnings. The state income tax provided earlier is the exact amount of such taxes incurred during the year. 23,000 10,200 3,053,070 (937,769) (63,750) 2,051,551