Janet Morton and Kim Wong Pet Kingdom Inc

Janet Morton and Kim Wong Pet Kingdom Inc On November 1 2006, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized as follows: *Business address is 1010 Northwest Parkway, Dallas TX 75225, phone is (214) 555-2211; email address is . *EIN is 11-, principal business activity code is *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 the company. Janet's SSN is and Kim's SSN is . *Pet Kingdom is an accrual method, calendar year tax payer. Inventories are determined using FIFO and the lower of cost or market. The company uses straight-line method of depreciation for book purposes and accelerated/MACRS for tax purposes. *During 2012, the corp distributed cash dividends of $300,000. Financial Statement Summary Information: Income Statement: Income: Gross Sales $6,900,000 Sales Returns & Allowances $(240,000) Net Sales $6,660,000 Cost Of Goods Sold $(2,760,000) Gross Profit $3,900,000 Dividends received from stock investments in less-than-20%- owned US Corporations $52,500 Interest Income: State Bonds $18,000 Certificates of Deposit $24,000 Total Interest income: $42,000 Total Income: $3,994,500 Expenses: Salaries - Officers: Janet Morton: $315,000 Kim Wong: $315,000 TOTAL Salaries: $630,000 Salaries - Clerical and Sales: $870,000 Taxes (State, local and payroll): $285,000 Repair and Maintenance: $168,000 Interest Expense: Loan to purchase State bonds $10,500 Other Business Loans: $261,000 TOTAL Interest Expense: $271,500 Advertising : $69,000 Rental Expense: $129,000 Depreciation: $120,000 Charitable Contributions: $45,000 Employee Benefit Programs: $72,000 Premiums on term life insurance policies on the lives of Janet Morton and Kim Wong; Pet Kingdom is the designated beneficiary: $48,000 Total Expenses: ($2,707,500) Net Income before taxes: $1,287,000 Federal Income Tax: $(423,555) Net income per books: $863,445 **(Depreciation for tax purposes is $165,00. I am not provided enough detailed data to complete a form 4562.) BALANCE SHEET ASSETS Jan 1, 2012 Dec 31, 2012 Cash $1,056,000 $748,000 Trade notes & Accts. Receivable $1,815,000 $2,021,000 Inventories $3,300,000 $3,636,000 Stock Investments $990,000 $990,000 State Bonds $330,000 $330,000 Certificates of Deposit $385,000 $385,000 Prepaid Federal Tax $0 $4,445 Buildings/other Depr. Assets $4,805,000 $4,805,000 Accum. Depreciation $(727,000) $(847,000) Land $715,000 $715,000 Other Assets $123,000 $113,000 TOTAL ASSETS $12,792,000 $12,900,445 LIABILITIES AND EQUITY Jan 1, 2012 Dec 31, 2012 Accounts payable $2,035,000 $1,837,000 Other current liabilities $213,000 $184,000 Mortgages $4,550,000 $4,322,000 Capital stock $3,000,000 $3,000,000 Retained earnings $2,994,000 $3,577,445 TOTAL LIABILITIES & EQUITY $12,792,000 $12,900,445