ACCT346 Part 3 -- Form 1120S

Part 3 -- Form 1120S
During the year ended 12/31/12, Esscorp Embalming:
• Made distributions of $198,000 to Ms. Maine, and $22,000 to Dr. Badr.
• Paid officer's compensation of $200,000 to Ms. Maine (who devoted 33% of her time
to the business) and $100,000 to Dr. Badr (who devoted 100% of his time to the
business).
• Received exempt municipal interest income of $5,000.
• Received dividend income of $30,000 from Wonder Cure, Inc., (in which Embalming
has a 30% ownership interest) and $20,000 from corporations in which Embalming
has less than a 20% ownership interest. All dividends are qualified dividends.
• Paid no salaries/wages attributable to inventories.
Also note that the owners had $373,500 (Ms. Maine) and $41,500 (Dr. Badr) in their capital
accounts at the beginning of the year. The corporation’s balance sheets and income statement are
presented in Exhibits 5 and 6, respectively.
Exhibit 5
Esscorp Embalming, Inc.
Balance Sheet
Years ended December 31, 2011 and 2012
Balances as of
ASSETS 12/31/11 12/31/12
Cash $25,000 $71,000
Inventory $150,000 $100,000
Depreciable assets (net) $300,000 $200,000
TOTAL ASSETS $475,000 $371,000
LIABILITIES &
RETAINED EARNINGS
Accounts payable (inventory) $10,000 $12,000
Notes payable $25,000 $0
Common stock $25,000 $25,000
Retained earnings $415,0001 $334,000
TOTAL LIABILITIES &
RETAINED EARNINGS $475,000 $371,000
1 Assume that the entire beginning balance is in AAA.
1
ACCT 346 Fall 2013
Exhibit 6
Esscorp Embalming, Inc.
Income Statement
Year ended December 31, 2012
Gross receipts $1,000,000
Cost-of-Goods Sold ($250,000)
Dividend Income $50,000
Interest Income $20,000
Capital losses ($35,000)
$785,000
Compensation of officers ($300,000)
Salaries and wages ($120,000)
Rents ($60,000)
Property taxes ($10,000)
Utilities ($24,000)
Depreciation ($100,000)
Charitable contributions ($20,000)
Investment interest
expense
($12,000)
($646,000)
$139,000
Property Transactions
Item Purchase**
Price – Date
Sale
Price – Date
100 shares of CYA stock $3,000 – 1/1/00 $7,000 – 1/15/12
2,000 shares of ABZ stock $100,000 – 6/30/00 $54,000 – 6/29/12
City of LA Bonds $25,000 – 10/15/11 $22,000 – 2/14/12
220 $125,000 – 5/30/11 $135,000 – 10/31/12
**The taxpayer received 1099s for these transactions, but the basis was not reported to the IRS.
2ACCT 346 Fall 2013
Required
Use the information presented to complete the assigned pages of the corporation’s Form 1120S
and Schedule D. Also complete one Schedule K-1 (Form 1120S) for Ms. Maine. (You will not
be filing a complete return.) Use PDF forms from the IRS web site