Tax Return Problem. KJJ Corp. was formed on October 10, 2002 by Kimberly Jen (123- 45-6789),...

Transcribed Image Text:

Tax Return Problem. KJJ Corp. was formed on October 10, 2002 by Kimberly Jen (123- 45-6789), Jennifer James (234-56-7890) and James Kim (345-67-8901). It is a hardware store and is located at 175 Clerk Road, Newtown, OH 45105. KJJ's employer identification number is 10-1010101 and its business code is 444130. KJJ's telephone number is 513-525-1234 and its e-mail address is KJJCorp@kjj.com. KJJ Corp. uses the calendar year and the accrual basis. It uses straight-line depreciation for tax and book purposes and FIFO and lower-of-cost-or-market for inventory purposes. Kimberly, Jennifer and James each received 200 shares of KJJ Corp.'s common stock on October 10, 2002. No other stock has been issued or is outstanding. Each is a full- time employee of the firm and each is paid $200,000. KJJ Corp. made a $105,000 ($35,000 to each owner) cash distribution in 2018. During 2018, KJJ Corp. made estimated federal tax payments of $55,000 each quarter. Financial information for 2018 follows: Income Statement Income Sales Sales returns and allowances Net sales Cost of goods sold Gross profit Interest income Corporate bonds Statebonds Dividend income Expenses $ 5,400,000 $ 20,000 $ 5,380,000 $ 3,120,000 $ 2,260,000 $ 20,000 $ 60,000 $ 80,000 $ 100,000 80000 Total income $ 2,440,000 $ 600,000 $ 510,000 $ 20,000 $ 30,000 $ 249,000 25,000 $ 47,000 $ 72,000 $ 36,000 $ 25,000 $ 120,000 $ 63,000 Total expenses $ 1,725,000 $ 715,000 $635,000 $ (214,200) $ 500,800 Salaries-officers Salaries and wages-other Life insurance premiums on three owners/officers KJJ Corp. is the beneficiary Repairs and maintenance Taxes (state, local, payroll) Interest expense Loans to acquire state bonds Other Advertising Charitable contribution Depreciation Employee benefits program Net income before taxes Federal income taxes Net income per books Balance Sheet Assets Cash Trade and accounts receivables Inventories Corporate bonds State bonds Stock ( <20%-owned, domestic corporations) Prepaid federal incometaxes Property, plant and equipment Accumulated depreciation Land Other assets Liabilities and Owners' Equity Accounts payable Other current liabilities Mortgages Capital stock Retained earnings 12/31/17 12/31/18 $ 400,000 $ 550,000 $ 600,000 $ 623,000 $ 1,500,000 $ 1,330,000 $ 250,000 $ 260,000 $ 800,000 $ 851,000 $ 900,000 $1,000,000 $ 5,800 $ 3,000,000 $3,030,000 $ (1,100,000) $ (1,220,000) $ 1,900,000 $1,810,000 $ $ Total Assets $ 50,000 $ 50,000 6,000 $ 6,406,000 $ 6,482,800 3,000 $ 301,000 $ 257,000 $ 405,000 $ 430,000 $ 1,500,000 $ 1,200,000 $ 3,000,000 $ 3,000,000 $ 1,200,000 $ 1,595,800 Total Liabilities and Owners' Equity $ 6,406,000 $ 6,482,800 $ 319,200 300000 Prepare KJJ Corp.'s From 1120 and related schedules/forms: Forms 1125-A and 1125- E, and Schedules C, J, K, L, M-1, and M-2. (Do not complete Form 4562 [depreciation calculation] since you do not have all the information). Go to www.irs.gov and download the necessary forms. 102000 215900 Tax Return Problem. KJJ Corp. was formed on October 10, 2002 by Kimberly Jen (123- 45-6789), Jennifer James (234-56-7890) and James Kim (345-67-8901). It is a hardware store and is located at 175 Clerk Road, Newtown, OH 45105. KJJ's employer identification number is 10-1010101 and its business code is 444130. KJJ's telephone number is 513-525-1234 and its e-mail address is KJJCorp@kjj.com. KJJ Corp. uses the calendar year and the accrual basis. It uses straight-line depreciation for tax and book purposes and FIFO and lower-of-cost-or-market for inventory purposes. Kimberly, Jennifer and James each received 200 shares of KJJ Corp.'s common stock on October 10, 2002. No other stock has been issued or is outstanding. Each is a full- time employee of the firm and each is paid $200,000. KJJ Corp. made a $105,000 ($35,000 to each owner) cash distribution in 2018. During 2018, KJJ Corp. made estimated federal tax payments of $55,000 each quarter. Financial information for 2018 follows: Income Statement Income Sales Sales returns and allowances Net sales Cost of goods sold Gross profit Interest income Corporate bonds Statebonds Dividend income Expenses $ 5,400,000 $ 20,000 $ 5,380,000 $ 3,120,000 $ 2,260,000 $ 20,000 $ 60,000 $ 80,000 $ 100,000 80000 Total income $ 2,440,000 $ 600,000 $ 510,000 $ 20,000 $ 30,000 $ 249,000 25,000 $ 47,000 $ 72,000 $ 36,000 $ 25,000 $ 120,000 $ 63,000 Total expenses $ 1,725,000 $ 715,000 $635,000 $ (214,200) $ 500,800 Salaries-officers Salaries and wages-other Life insurance premiums on three owners/officers KJJ Corp. is the beneficiary Repairs and maintenance Taxes (state, local, payroll) Interest expense Loans to acquire state bonds Other Advertising Charitable contribution Depreciation Employee benefits program Net income before taxes Federal income taxes Net income per books Balance Sheet Assets Cash Trade and accounts receivables Inventories Corporate bonds State bonds Stock ( <20%-owned, domestic corporations) Prepaid federal incometaxes Property, plant and equipment Accumulated depreciation Land Other assets Liabilities and Owners' Equity Accounts payable Other current liabilities Mortgages Capital stock Retained earnings 12/31/17 12/31/18 $ 400,000 $ 550,000 $ 600,000 $ 623,000 $ 1,500,000 $ 1,330,000 $ 250,000 $ 260,000 $ 800,000 $ 851,000 $ 900,000 $1,000,000 $ 5,800 $ 3,000,000 $3,030,000 $ (1,100,000) $ (1,220,000) $ 1,900,000 $1,810,000 $ $ Total Assets $ 50,000 $ 50,000 6,000 $ 6,406,000 $ 6,482,800 3,000 $ 301,000 $ 257,000 $ 405,000 $ 430,000 $ 1,500,000 $ 1,200,000 $ 3,000,000 $ 3,000,000 $ 1,200,000 $ 1,595,800 Total Liabilities and Owners' Equity $ 6,406,000 $ 6,482,800 $ 319,200 300000 Prepare KJJ Corp.'s From 1120 and related schedules/forms: Forms 1125-A and 1125- E, and Schedules C, J, K, L, M-1, and M-2. (Do not complete Form 4562 [depreciation calculation] since you do not have all the information). Go to www.irs.gov and download the necessary forms. 102000 215900