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 $2023,$ and each contributed $$140,000$ in exchange for a $50$ percent ownership interest. GTE also borrowed $$560,000$ 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 $2023$ activities:

GTE uses the cash method of accounting $($for both book and tax purposes$)$ and reports income on a calendar$-$year basis.

GTE received $$900,000$ of sales revenue and reported $$420,000$ of cost of goods sold $($it did not have any ending inventory$).$

GTE paid $$75,000$ compensation to James, $$75,000$ compensation to Paul, and $$85,000$ of compensation to other employees $($assume these amounts include applicable payroll taxes, if any$).$

GTE paid $$24,000$ of rent for a building and equipment, $$29,000$ for advertising, $$39,200$ in interest expense, $$4,900$ for utilities, and $$2,900$ for supplies.

GTE contributed $$9,500$ to charity.

GTE received a $$2,800$ qualified dividend from a great stock investment $($it owned $2$ percent of the corporation distributing the dividend$),$ and it recognized $$2,400$ in short$-$term capital gain when it sold some of the stock.

On December $1,2023,$ GTE distributed $$29,000$ to James and $$29,000$ to Paul.

GTE has qualified property of $$309,000($unadjusted basis$).$

Note: Leave no answers blank. Enter zero if applicable. Enter N$/$A if not applicable.

a$-1.$ Assume James and Paul formed GTE as an S corporation.

Complete GTE's Form $1120-$S$,$ page $1$; Form $1120-$S$,$ Schedule K$.$Required Information

While James Craig and his former classmate Paul Dolittle both studled accounting at school, they ended up pursuing

careers in professional cake decorating. Thelr company, Good to Eat $($GTE$),$ speclalizes in custom$-$sculpted cakes for

weddings, birthdays, and other celebrations. James and Paul formed the business at the beginning of $2023,$ and each

contributed $$140,000$ in exchange for a $50$ percent ownership interest. GTE also borrowed $$560,000$ from a local bank.

Both James and Paul had to personally guarantee the loan. Both owners provide signlficant services for the business. The

following information pertains to GTE's $2023$ actlvitles:

GTE uses the cash method of accounting $($for both book and tax purposes$)$ and reports Income on a calendar$-$year

basls.

GTE recelved $$900,000$ of sales revenue and reported $$420,000$ of cost of goods sold $($It did not have any ending

Inventory$).$

GTE pald $$75,000$ compensation to James, $$75,000$ compensation to Paul, and $$85,000$ of compensation to other

employees $($assume these amounts include applicable payroll taxes, If any$).$

GTE pald $$24,000$ of rent for a bullding and equipment, $$29,000$ for advertising, $$39,200$ in interest expense, $$4,900$

for utilitles, and $$2,900$ for supplies.

GTE contributed $$9,500$ to charlty.

GTE recelved a $$2,800$ qualified dividend from a great stock Investment $($It owned $2$ percent of the corporation

distributing the dividend$),$ and it recognized $$2,400$ in short$-$term capital gain when it sold some of the stock.

On December $1,2023,$ GTE distributed $$29,000$ to James and $$29,000$ to Paul.

GTE has qualfied property of $$309,000($unadjusted basis$).$

Note: Leave no answers blank. Enter zero If applicable. Enter N$/$A If not applicable.

a$-1.$ Assume James and Paul formed GTE as an S corporation.

Complete GTE's Form $1120-$S$,$ page $1$; Form $1120-$S$,$ Schedule K$.$

cllck "Save."