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Problem C-Form 1120

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Problem C-Form 1120 Powered By Docstoc
					Based on information below, prepare a Form 1120 for Angler for the tax year 2008. Suggested

software: TaxCut. (Need to submit PDF of Form 1120 and applicable schedules)



On February 12, 1998, Brandon Short and Michael Allen formed Angler Corporation to sell

fishing tackle. Pertinent information regarding Angler is summarized as follows:

   1. Angler’s business address is 1717 Carlson Street, Sidney, NY 13838; its telephone

       number is (607) 555-2211; and its e-mail address is angler@angler.com.

   2. The employer identification number is 11-1111111, and the principal business activity

       code is 451110.

   3. Brandon and Michael each owned 50% of the common stock and are president aand vice

       president of the company, respectively. No other class of stock is authorized.

   4. Both Brandon and Michael are full- time employees of Angler, and their Social Security

       numbers are 123-45-6789 and 978-65-4321.

   5. Angler is an accrual method, calendar year tax payer. Inventories are determined using

       FIFO and the lower cost of market method. Angler uses the straight line method of

       depreciation for both book and tax purposes.

   6. During 2008, the corporation distributed cash dividends of $80,000.

   7. During 2008, Angler made estimated tax payments of $37,000 each quarter to the IRS.



Angler’s Financial Statements for 2008 are shown on the following pages:
                                          Income Statement
                           Income                                                             $2,300,000
Gross Sales                                                                                     (80,000)
Sales Returns and Allowances                                                                  $2,220,000
Net Sales                                                                                      (920,000)
Cost of Goods Sold                                                                            $1,300,000
Gross Profit
Dividends Received from stock investments
  in less-than-20%-owned U.S. Corporations                                                      120,000
Interest Income
  State Bonds                                                     14,000
  Certificates of Deposit                                         10,000                          24,000
Total Income                                                                                  $1,444,000

Expenses
Salaries-Officers
  Brandon Short                                                 $160,000
  Michael Allen                                                  160,000      $320,000
Salaries-clerical and sales                                                    290,000
Taxes (state, local and payroll)                                                85,000
Repairs and maintenance                                                         56,000
Interest Expense
  Loan to purchase state bonds                                    $8,000
  Other business loans                                            12,000        20,000
Advertising                                                                      6,000
Rental Expense                                                                  68,000
Depreciation*                                                                   40,000
Charitable Contributions                                                        15,000
Employee Benefit Programs                                                       24,000
Premiums on term life insurance policies on
lives of Brandon and Michael; Angler is
the designated beneficiary                                                      16,000
Total Expenses                                                                                 $940,000
Net income before taxes                                                                        $504,000
Federal Income tax                                                                             (146,200)
Net income per books                                                                           $357,800


*You are not provided enough detailed data to complete a form 4562(depreciation). If you
solve this problem using TaxCut, enter the amount of deprecaiation on line 20 of Form 1120.
                                         Balance Sheet
Assets                                             January 1, 2008        December 31, 2008
Cash                                           $       480,000        $       334,660
Trade notes and accounts receivable                        808,400                1,084,600
Inventories                                                600,000                  712,000
State bonds                                                160,000                  160,000
Certificates of deposit                                    140,000                  140,000
Prepaid federal tax                                               0                   1,800
Buildings and other depreciable assets                     240,000                  240,000
Accumulated depreciation                                   (88,800)               (128,800)
Land                                                         20,000                  20,000
Other assets                                                  3,600                   2,000
  Total assets                                           2,363,200                2,566,260


Liabilities and Equity                             January 1, 2008        December 31, 2008
Accounts payable                               $       300,000                     275,560
Other current liabilities                                   80,300                  40,000
Mortgages                                                  210,000                 200,000
Capital stock                                              500,000                 500,000
Retained earnings                                        1,272,900               1,550,700
 Total liabilities and equity                  $     2,363,200                   2,566,260

				
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