This is a tax paper requiring the calculation of Form 1120 & Form 4562
Note to Instructor: Part A requires the completion of pre-tax financial statements. This requirement may only be appropriate for accounting majors. You may wish to provide these statements to your students if you expect them to complete only the tax return in part B.
Part A: Following are the before-tax financial accounting income statement and balance sheet for Snap-
It-Open Corporation as of December 31, 2008
Snap-It-Open Corporation
Income Statement
For the Year Ending December 31, 2008
Sales Revenue $1,535,000
Cost of Goods Sold (1) 428,000
Gross Profit on Sales $1,107,000
Expenses:
Salaries and Wages $186,000
FICA/FUTA (2) 25,810
Rent 240,000
Repairs and Maintenance 20,000
Utilities 80,000
Taxes and Licenses (excluding FICA and FUTA taxes) 10,000
Health Insurance 16,000
Advertising 40,000
Travel (excluding meals) 20,000
Meals and Entertainment 15,000
Group Term Life Insurance 2,000
Depreciation (3) 100,000
Interest Expense 57,500
Bad Debt Expense (4) 30,700
Total Expenses 843,010
Net Income Before Tax $263,990
Beginning Inventory 0
+ Purchases $360,000
- Purchase Returns (5,000)
- Ending Inventory (33,000)
+ Factory Salaries 106,000
Cost of Goods $428,000
TRP 1
Corporate Tax Return Problem Solution
Note to Instructor: Part A requires the completion of pre-tax financial statements. This requirement may only be appropriate for accounting majors. You may wish to provide these statements to your students if you expect them to complete only the tax return in part B.
Part A: Following are the before-tax financial accounting income statement and balance sheet for Snap-
It-Open Corporation as of December 31, 2008
Snap-It-Open Corporation
Income Statement
For the Year Ending December 31, 2008
(1) Cost of Goods Sold:
(2) FICA = $292,000 x .0765 = $22,338