Audit Report
Additional Information
Jim’s Auto Body (Inc., or LLC) 1122 Sesame Street New York, NY, 10002 EIN 90-1234567 Dated incorporated January 1st, 2010
Jim Jameson 8701 Electric Avenue New York, NY, 10002SSN: 123-45-6789
· Jim Jameson took on Fred as a partner for the LLC. Fred owns 50% of all profits, losses, and capital. You do not have to complete Part 2 K, L, or M on the 1065 Schedule K1 (there is not enough information provided).
· $4,500 salary expense is officer’s compensation for the corporation and guaranteed payment to partners for the LLC.
· $55,000 equipment is 7-year property in its 5th year of service and was placed into service in the middle of the year, thus using the half-year convention. Use the correct table from the IRS—Publication 946: How to Depreciate Property—to determine the tax deductible depreciation. Form 4562 is not required.
· Jim made four quarterly estimated tax payments of $800 each over the course of the year.
· In accordance with IRS instructions: "Corporations with total receipts and total assets at the end of the tax year less than $250,000 are not required to complete Schedules L, M-1, and M-2" (Internal Revenue Service, n.d.). This also applies to the LLC.
· For the 1065 Schedule K1, you will not have enough information to fill out Part 2 K, L, and M.
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Jim's Auto Body |
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Revenues: |
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Service Revenue |
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28,000 |
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Total Revenue |
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28,000 |
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Expenses: |
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Salary Expense |
4,500 |
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Rent Expense |
1,200 |
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Utility Expense |
300 |
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Depreciation Expense |
500 |
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Insurance Expense |
100 |
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Supply Expense |
400 |
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7,000 |
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Net Income |
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21,000
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Jim's Auto Body |
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Balance Sheet |
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As of April 30, 2015 |
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Assets
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Cash |
101,800 |
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Acct Rec'able |
20,000 |
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PP In |
1,100 |
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Equipment |
55,000 |
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Accu. Dep. |
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500 |
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Supplies |
2,600 |
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Total Assets |
180,000 ______________________________________________ ______________________________________________ |
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Liabilities and Stockholders' Equity |
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Liabilities: |
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Accounts Payable |
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8,000 |
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Salary Payable |
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3,000 |
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Total Liabilities |
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11000.00 |
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Stockholders' Equity: |
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Common Stock |
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150,000 |
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Retained Earnings |
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19000 |
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______________________________________________ ______________________________________________ |
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Total Stockholders' Equity |
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169000.00 |
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Total Liabilities and Stockholders' Equity |
180,000 |
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______________________________________________ ______________________________________________ |
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