For 2012, Permtemp reported the following book income statement and balance sheet, excluding the federal

Posted on Posted in Law, Taxation

For 2012, Permtemp reported the following book income statement and balance sheet,

excluding the federal income tax expense, deferred tax assets, and deferred tax liabilities:

Sales $33,000,000

Cost of goods sold )

Gross profit $11,000,000

Dividend income 55,000

Tax-exempt interest income

Total income $11,070,000

Expenses:

Depreciation $ 800,000

Bad debts 625,000

Charitable contributions 40,000

Interest 455,000

Meals and entertainment 60,000

Other

Total expenses )

Net income before federal income taxes

Cash $ 2,125,000

Accounts receivable $ 3,300,000

Allowance for doubtful accounts ) 2,850,000

Inventory 6,000,000

Fixed assets $10,000,000

Accumulated depreciation ) 8,400,000

Investment in corporate stock 1,000,000

Investment in tax-exempt bonds

Total assets

Accounts payable $ 2,120,000

Long-term debt 8,500,000

Common stock 6,000,000

Retained earnings

Additional information for 2012:

Depreciation for tax purposes is $2.45 million under MACRS.

Bad debt expense for tax purposes is $425,000 under the direct writeoff method.

Qualified production activities income is $3 million.

Required for 2012:

a. Prepare page 1 of the 2012 Form 1120, computing the corporation s taxable income

and tax liability.

Also help figuring out schedule C, L, M-2, & M-3

 included  2011 pg 1 if it is needed.

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