For 2012, Permtemp reported the
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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