Instructions Comprehensive Problem 11-1 Olive Corporation was formed and began o
ID: 2619818 • 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) $270,000 20,000 $290,000 110,000 $180,000 $77,000 30,000 9,000 3,000 10,000 2,000 16,000 Depreciation for book and tax purposes Advertising Payroll taxes Total other expenses Net income (before federal income tax expense) 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 "loss". If 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 "°Explanation / Answer
Details Amount (in $) Gross Receipts/Sales 2,70,000.00 Cost of Goods Sold -1,10,000.00 Gross Profits 1,60,000.00 Dividend 6,000 Total Income 1,66,000.00 Note* Dividen from less than 20% owned Domestic corporation is eligible for 70% of deduction Compensation of Officers 77,000 Salaries & Wages 30,000 Bad Debts 9,000 Repairs 3,000 Depreciation 10,000 Advertising 2,000 Payroll Taxes 16,000 Total Other Expense 1,47,000 Taxable Income 19,000.00 Tax 2850 It falls in the first slab of 15% tax rate, as the income is under $50,000 Total Payments and refundable credits 3,000 Overpayment 150 Credited to 2018 Estimated Tax Payment $150 Part 11- Payments and refundable credits 2017 Estimated Tax Payment $3,000.00 Balance Sheet Assets Cash $30,000.00 Account Receivable $17,150.00 Inventory (Cost) $70,000.00 Equipment $90,000.00 Less Accumulated Depreciation -$10,000.00 Total Assets $1,97,150.00 Liability and Owners equity Accounts Payable $4,550.00 Note Payable $85,000.00 Common Stock $80,000.00 Retained Earnings $27,600.00 Total Liability and Owners equity $1,97,150.00 Reconciliation of income(Loss) Books and with income per Return Net Income per Books $33,000.00 Income recorded on Books not included in return -$14,000.00 Income as per return $19,000.00