Instructions Comprehensive Problem 11-1 Olive Corporation was formed and began o
ID: 2393627 • Letter: I
Question
Instructions Comprehensive Problem 11-1 Olive Corporation was formed and began operations on January 1, 2017. The corporation's income statement for the year and the balance sheet at year-end are presented below. The Olive Corporation Income Statement for the Year Ended December 31, 2017 Gross income from operations Qualified dividends received from a 35 percent-owned domestic corporation Total gross income Cost of goods sold Total income Other expenses: Compensation of officers Salaries and wages Bad debts (direct charge-offs) Repairs Depreciation for book and tax purposes Advertising Payroll taxes Total other expenses Net income (before federal income tax expense) $270,000 20,000 $290,000 $180,000 $77,000 30,000 9,000 3,000 10,000 2,000 16,000 147,000 $33,000 The Olive Corporation Balance Sheet as of December 31, 2017 Assets: Cash Accounts receivable Inventory (at cost) Equipment Less: accumulated depreciation Total assets Liabilities and owners' equity: Accounts payable Note payable (due in 10 years) Common stock Retained earnings Total liabilities and owners' equity $30,000 20,000 70,000 90,000 (10,000) $200,000 $ 4,550 85,000 80,000 30,450 $200,000 The corporation made estimated tax payments of $3,000 and the corporation's federal income tax expense is equal to the federal tax liability. Assume any overpayment is credited to the 2018 estimated tax. Required: Prepare Form 1120 1. Enter all amounts as positive numbers,except for a Toss f required, enter a loss as a negative number on the tax form 2 If an amount box does not require an entry, or the answer is zero, enter " activity 1530118519197&xqm; p-1 Page 1 of 10Explanation / Answer
Income Statement Line No Particulars Amount 1a Gross receipts or sales 270000 1b Returns and allowances 0 1c Balance. Subtract line 1b from line 1a 270000 2 Cost of goods sold 110000 3 Gross profit. Subtract line 2 from line 1c 160000 4 Dividends 20000 5 Interest 0 6 Gross Rents 0 7 Gross royalties 0 8 Capital gains (net income) 0 9 Net gain or loss from Form 4797 0 10 Other income 0 11 Total income 180000 12 Compensation of officers 77000 13 salaries and wages 30000 14 Repairs and maintenance 3000 15 Bad debts 9000 16 Rent 0 17 Taxes and licenses 16000 18 Interest 0 19 Charitable Contributions 0 20 Depreciation 10000 21 Depletion 0 22 Advertising 2000 23 Pension, profit sharing etc, plans 0 24 Employee benefir programs 0 25 Domestic production activities deduction 0 26 Other deductions 0 27 Total deductions 147000 28 Taxable income before net operating loss 33000 deducton and special deduction. Subtract line 27 from line 11 29a Net operating loss deductions 0 29b Special deductions 0 29c Add lines 29a and 29b 0 30 Taxable Income. Subtract line 29c from 33000 line 28 31 Total tax 4950 32 Total payments and refundable credits 3000 33 Estimated tax penalty 0 34 Amount owed 1950 35 Over payment 0 36 Enter amount from line 35 you want: Credited to 2018 estimated tax 0 Refunded 0 Schedule L. Balance Sheet Line No Particulars Amount Amount Assets 1 Cash 30000 2a Trade notes and accounts receivable 29000 2b Less allowance for bad debts 9000 20000 3 inventories 70000 4 US government obligations 0 5 Tax exempt securities 0 6 other current assets 0 7 Loans to shareholders 0 8 Mortgage and real estate loans 0 9 Other investments 0 10a Buildings and other depreciable assets 90000 10b Less accumulated depreciation 10000 80000 11a Depletable assets 0 11b Less accumulated depletion 0 0 12 Land (net of any amortization) 0 13a Intangible assets (amortizable only) 0 13b Less accumulated amortization 0 0 14 Other assets 0 15 Total assets 200000 Line No Particulars Amount Amount Liabilities and Shareholders Equity 16 Accounts payable 4550 17 Mortgages, notes, payable in less than 1 yr 18 Other current liabilities 19 Loans from shareholders 20 Mortgages, notes, payable in more than 1 yr 85000 21 Other liabilities 22 Capital stock: a) preferred stock b) common stock 80000 80000 23 Additional paid in capital 24 Retained earnings appropriated 25 Retained earnings unappropriated 30450 26 Adjustment to shareholders equity 27 Less cost of treasury stock 0 Total liabilities and shareholders equity 200000 Schedule M1 Line No Particulars Amount 1 Net income (loss) as per books 33000 2 Federal income tax (as per books) 0 3 Excess of capital losses over capital gains 0 4 income subject to tax not recorded in book 0 this year 5 Expenses recorded on books this year not 0 deducted on this return 6 Add lines 1 through 5 33000 7 Income recorded on books in this return 33000 8 Deductions on this return not charged to 0 income this year 9 Add lines 7 and 8 33000 10 Income (page 1, line 28) 33000