On November 1, 2008, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized as follows.

• Pet Kingdom's business address is 1010 Northwest Parkway, Dallas, TX 75225; its telephone number is (214) 555-2211; and its e-mail address is petkingdom@pki.com.
• The employer identification number is 11-1111111, and the principal business activity code is 453910.
• Janet and Kim each own 50% of the common stock; Janet is president and Kim is vice president of the company. No other class of stock is authorized.
• Both Janet and Kim are full-time employees of Pet Kingdom. Janet's Social Security number is 123-45-6789, and Kim's Social Security number is 987-65-4321.
• Pet Kingdom is an accrual method, calendar year taxpayer. Inventories are determined using FIFO and the lower of cost or market method. Pet Kingdom uses the straight-line method of depreciation for book purposes and accelerated depreciation (MACRS) for tax purposes.
• During 2018, the corporation distributed cash dividends of $250,000.

Pet Kingdom's financial statements for 2018 are shown below.

During 2018, Pet Kingdom made estimated tax payments of $56,000 each quarter to the IRS. Prepare a Form 1120 for Pet Kingdom for tax year 2018 (if the final 2018 Form 1120 is not available, see if a draft 2018 Form 1120 is available on the IRS website).

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Income Statement Income $ 5,750,000 Gross sales Sales returns and allowances (200,000) $ 5,550,000 (2,300,000) $ 3,250,000 Net sales Cost of goods sold Gross profit Dividends received from stock 43,750 investments in less-than-20%- owned U.S. corporations Interest income: $ 15,000 State bonds Certificates of deposit 20,000 35,000 $ 3,328,750 Total income Expenses Salaries-officers: Janet Morton $262,500 Kim Wong $525,000 262,500 Salaries-clerical and sales 725,000 238,000 Taxes (state, local, and payroll) Repairs and maintenance 140,000 Interest expense: Loan to purchase state bonds $ 9,000 Other business loans 207,000 216,000 Advertising 58,000 Rental expense 109,000 Depreciation* 106,000 Charitable contributions 38,000 Employee benefit programs 60,000 Premiums on term life insurance policies on lives of Janet Morton and Kim Wong; Pet Kingdom is the designated beneficiary 40,000 Total expenses (2,255,000) $ 1,073,750 (221,734) $ 852,016 Net income before taxes Federal income tax Net income per books Balance Sheet Assets January 1, 2018 December 31, 2018 Cash $ 1,200,000 $ 1,039,461 Trade notes and accounts receivable 2,062,500 2,147,000 Inventories 2,750,000 3,030,000 Stock investment 1,125,000 1,125,000 State bonds 375,000 375,000 Certificates of deposit Prepaid Federal tax 400,000 400,000 -0- 2,266 Buildings and other depreciable assets 5,455,000 5,455,000 Accumulated depreciation (606,000) (712,000) Land 812,500 812,500 Other assets 140,000 128,500 $13,802,727 Total assets $13,714,000 Liabilities and Equity Accounts payable $ 2,284,000 $ 1,840,711 Other current liabilities 175,000 155,000 Mortgages Capital stock Retained earnings 4,625,000 4,575,000 2,500,000 2,500,000 4,130,000 $13,714,000 4,732,016 $13,802,727 Total liabilities and equity