Tax Return

Tax return project

Prepare Form 1120 for ABC Corporation.

ABC Corporation was formed on January 2, 1978. ABC is in the business of retailing custom fireplaces and accessories and is located at 150 Clerk Road, Newtown, OH 45105. The corporation’s business code is 442299 and its employer identification number is 88-0022330.

Stock ownership and officer compensation are as follows:

S. Reed # 347-54-1212 50% $60,000

E. Reed #379-12-5447 25% $20,000

J. Reed #406-23-4567 25% $20,000

S. Reed devotes 100% of his time to the business; E. Reed and J. Reed together devote 50% of their time to the business.

The corporation made cash distributions of $50,000 on March 15, 2021, and $78,000 on September 15,2021. The distributions were made in proportion to stockholders.

The corporation’s purchase of additional office equipment at a cost of $10,000 was the only asset transaction during the year.

Estimated tax payments of $6,250 each were made on April 14, June 14, September 14, and December 14.

Additional data include:

Sales	$538,262
Sales returns	20,000
purchases	205,000
Dividend income*	1,000
Interest- city of Chicago bonds	1,500
Wages	30,000
Advertising	18,000
Repairs	800
Bad debts	2,000
Rents	15,000
Taxes	8,000
Charitable contributions (nonpolitical)	1,400
Depreciation form 4562 (not shown)	20,000

*Dividends from less-than-20%-owned domestic corporation.

Financial Balance Sheet	Beginning of Year	End of Year
cash	$41,200	$35,700
Account Receivable	65,000	53,062
Inventories	40,000	45,000
Investment	10,000	10,000
Depreciable assets	198,000	208,000
Accumulated depreciation	(20,000)	(40,000)
Account Payable	30,000	35,000
Capital Stock	150,000	150,000
Retained Earnings
Unappropriated	154,200	?