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UnAdjusted Adjusted Tax Tax 1120

Book Balance Adjustment Book Balance Adjustment Trial Balance Tax Return
Description DR CR DR CR DR CR DR CR DR CR Summary Tic Marks

Sales 2,100,000 2,100,000 2,100,000


Dividend Received 5,000 5,000 5,000
Interest Income on US Treasury Bonds 10,000 10,000 10,000
Long Ter Capital gain 7,000 7,000 7,000 -
Purchases 700,000 700,000 700,000
Salaries-Officers 210,000 210,000 210,000
Salaries-Sales & Clerical 265,000 265,000 265,000
Repairs & Maintenance 20,000 20,000 20,000
Bad Debt expense 5,000 5,000 4,000 1,000
Interest Expense 14,000 14,000 14,000
Charitable Contributions 60,000 60,000 60,000
Depreciation (per book) 40,000 40,000 10,000 50,000
Advertising 14,000 14,000 14,000
Meals & Entertainment 16,000 16,000 11,000 5,000
Taxes (State, local & payroll) 50,000 50,000 50,000
Life Insurance Premiums 10,000 10,000 10,000 -
Long Term Capital Loss 9,000 9,000 9,000 -
Federal Income Taxes paid 150,000 90,550 240,550 240,550 - 1,407,500 2,115,000
Dividend Paid 60,000 60,000 60,000 -
Dividend Received Deduction 3,500 3,500
Stock Valuation Loss 15,000 15,000 15,000 707,500 Taxable Income
Penalty for Underpayment 3,268 3,268 3,268 -
Cash 691,000 691,000 691,000
Accounts Receivable 31,000 31,000 31,000
Allowance for Doubtful accounts (6,000) (6,000) (6,000)
US Treasury Bonds 20,000 20,000 20,000
Stocks 70,000 70,000 70,000
Inventory 375,000 15,000 360,000 360,000
Equipment 405,000 405,000 405,000
Land 164,000 164,000 164,000
Building 500,000 500,000 500,000
Accumulated Depreciation (251,000) (251,000) (10,000) (261,000)
Accounts Payable-Tax Liability 93,818 93,818 334,318 334,318
Accounts Payable 350,000 350,000 - 350,000
Notes payable 400,000 400,000 - 400,000
Capital Stock 150,000 150,000 - 150,000
Retained Earnings 600,000 600,000 - 700,818

3,622,000 3,622,000 108,818 108,818 3,715,818 3,715,818 341,318 341,318 3,715,818 3,715,818

- - -

COMPUTATION OF NET INCOME


Sales 2,100,000
Dividend Received 5,000
Interest Income on US Treasury Bonds 10,000
Long Ter Capital gain 7,000
2,122,000
Less: Cost of Goods Sold
Opening Stock 375,000
Purchases 700,000
1,075,000
Closing Inventory 360,000
Gross Profit 715,000

Gross Profit 1,407,000

Operating Expenses
Salaries-Officers 210,000
Salaries-Sales & Clerical 265,000
Repairs & Maintenance 20,000
Bad Debt expense 5,000
Interest Expense 14,000
Charitable Contributions 60,000
Depreciation (per book) 40,000
Advertisng 14,000
Meals & Entertainment 16,000
Taxes (State, local & payroll) 50,000
Life Insurance Premiums 10,000
Long Term Capital Loss 9,000
Federal Income Taxes paid 240,550
Penalty Underpayment 3,268
956,818

Net Income B/4 Taxes 450,182

COMPUTATION OF TAXABLE INCOME


Sales 2,100,000
Dividend Received 5,000
Interest Income on US Treasury Bonds 10,000
Long Ter Capital gain
2,115,000
Less: Cost of Goods Sold
Opening Stock 375,000
Purchases 700,000
1,075,000
Closing Inventory 360,000
Gross Profit 715,000

Gross Profit 1,400,000

Operating Expenses
Salaries-Officers 210,000
Salaries-Sales & Clerical 265,000
Repairs & Maintenance 20,000
Bad Debt expense 1,000
Interest Expense 14,000
Charitable Contributions 60,000
Depreciation (per book) 50,000
Advertisng 14,000
Meals & Entertainment 5,000
Taxes (State, local & payroll) 50,000
Dividend Received Deductions 3,500
Total Allowable Deductions 692,500

Taxable Income before DRD & NOL 707,500

Dividend Received Deduction


Step 1: Tentative DRD
Dividend Received 5,000
70% Limitation 3,500

Step 2: Tentitative Taxable Income


- -
Less: Tentative DRD 3,500

Tentative Taxable Income (3,500)

Step 3: Taxable Income Limitation


- -
Multiply By: 70%
Taxable Income Limitation -

Step 4: Compare
Tentative DRD 3,500
Taxable Income Limitation -
Choose the lower 3,500

Meals & Entertainment


Cost 16,000
Less: Cost of Suite 6,000
10,000

50% Allowable Deduction 5,000

Charitable Contribution
Actual paid during the year 60,000
Limitation -

Underpayment Penalty Statement

Event Date Amount Due Amount Paid Balance Due Percent # of days Penalty
Amount Due 4/15/2012 60,136 60136 6% 0
Payment 4/15/2012 37500 22636 6% 61 227

Amount Due 6/15/2012 60138 82774 6% 0


Payment 6/15/2012 37500 45274 6% 92 685

Amount Due 9/15/2012 60138 105412 6% 0


Payment 37500 67912 6% 91 1016

Amount Due 12/15/2012 60138 128050 6% 0


Payment 12/15/2012 37500 90550 6% 90 1340

Date Filed 3/15/2013 90550


Total 3268