S-Corporation Tax Return Problem Required: Using the information provided below, complete First Place Inc.'s (FPI) 2022 Form 1120S. Also complete Kate Kleiber's Schedule K-1 and the forms 1125-A and 1125-E.

First Place Inc. (FPI) was formed as a corporation on January 5, 2018, by its two owners Kate Kleiber and James Chandler. FPI immediately elected to be taxed as an S corporation for federal income tax purposes. FPI sells mountain climbing gear to retailers throughout the Rocky Mountain region. Kate owns 70 percent of the FPI common stock (the only class of stock outstanding) and James owns 30 percent, and both devote 100% of their working time to FPI

FPI is located at 4200 West 400 North, Salt Lake City, Utah 84116. FPI's Employer Identification Number is 87-5467544. FPI's business activity is wholesale sales. Its business activity code is 423910. Both shareholders work as employees of the corporation. Kate is the president of FPI (Social Security number 312-89-4567). Kate's address is 1842 East 8400 South, Sandy, Utah 84094. James is the vice president of FPI (Social Security number 321-98-7645). James's address is 2002 East 8145 South, Sandy, Utah 84094. FPI uses the accrual method of accounting and has a calendar year-end.

1. FPI's purchases during 2022 were $115,000. It values its inventory based on cost using the FIFO inventory cost flow method. Assume the rules of 263A do not apply to FPI, and that the company did not make any changes in the way it measures or tracks inventory during 2022. 2. Of the $5,000 interest income, $2,000 was from a West Jordan city bond used to fund public activities (issued in 2018) and $3,000 was from a money market account. 3. FPI's dividend income comes from publicly traded stocks that FPI has owned for two years. 4. FPI's compensation is as follows: o Kate, $120,000 o James, $80,000 McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. o Other, $400,000. 5. FPI wrote off $6,000 in accounts receivable as uncollectible during the year. 6. FPI's total MACRS depreciation for 2022 is $17,000. 7. FPI made a $10,000 cash donation to the American Red Cross in 2022. 8. FPI's beginning balance of its Accumulated Adjustments Account (AAA) was $320,000. 9. FPI distributed $60,000 to its shareholders. 10. FPI's balance sheet for the period ending 12/31/2022, and the prior year, is below.

FPI Balance Sheet as of 12/31/2022 12/31/2021 12/31/2022

Assets Cash $ 90,000 $144,000

Accounts receivable 300,000 310,000

Allowance for doubtful accounts (60,000) (68,000)

Inventory 45,000 50,000

State and local bonds 38,000 38,000

Investments in stock 82,000 82,000

Fixed assets 100,000 100,000

Accumulated depreciation (20,000) (30,000)

Other assets 20,000 21,000

Total assets $ 595,000 $ 647,000

Liabilities and Shareholders' Equity

Accounts payable $ 60,000 $ 55,000

Other current liabilities 5,000 8,000

Other liabilities 10,000 14,000

Capital stock 200,000 200,000

Retained earnings 320,000 370,000

Total liabilities and shareholders' equity $595,000 $647,000

Income Statement

For year ending December 31, 2022

Revenue from sales $ 980,000 Sales returns and allowances (10,000) Cost of goods sold (110,000) Gross profit from operations $ 860,000 Other income: Dividend income $ 15,000 Interest income 5,000 Gross income $ 880,000 Expenses: Compensation $(600,000) Depreciation (10,000) Bad debt expense (14,000) Travel (1,000) Maintenance (8,000) Business interest (1,000) Property taxes (7,000) Charitable contributions (10,000) Other taxes (30,000) Rent (28,000) Advertising (14,000) Professional services (11,000) Employee benefits (12,000) Supplies (3,000) Other expenses (21,000) Total expenses (770,000) Net income $ 110,000