Assignment
The attachment financial statements have been provided by your client B4 INC. as a staff accountant at bellows and batten, you are to prepare the work papers used for preparation of the corporate tax return.
B4 INC, is a calendar year C corporation. Based on last year's file, you note the following.
1. B4 has a profit-sharing plan after a call to the pension company, you learn the amount of the retirement plan contribution for 2015 is $65,500. The pension is deductible in 2015 but will be paid in 2016 this will be an adjustment to the books.
2. Depreciation expense for 2015 is $12,450. B4 keeps the books on a tax basis so this will be an adjustment to the book balance
3. As you know, meals and entertainment are only 50% deductible
4. Officer's life insurance is not deductible
5. Penalties are not deductible
6. Federal income taxes are not deductible
7. California income taxes are not deductible for California
Begin by entering the balance sheet and profit and loss amounts in the "unadjusted per Books" columns. Make sure everything balances before making any adjustment.
Use the "adjusting journal entries" tab for all adjustments. These adjustments are provided to b4 so they can record them in the accounting system.
Schedule "m "items are differences between books and tax. These items are recorded on the "schedule m-1" tab
The spreadsheet template is not automated for example, when you make an entry on the journal entry tab. You have to "post" it to the balance sheet or profit and loss statement. The net book income does flow to the balance sheet page so don't overwrite that formula.
When you complete the books should be in balance. The journal entries should all be posted and the schedule m-1 tab should reconcile the adjusted book income to taxable income for federal and state.
Remember- credits are in parenthesis, debits are not.