Problem -
Willy Wonka (SSN: 999-88-7145) is the sole shareholder of Yummy, Inc., a candy company. He also has 2 other employees. Yummy' s financial information for 2016 and selected from 2015is as follows:
|
2015
|
2016
|
|
Cash
|
47,840
|
?
|
|
Inventory
|
9,607
|
3,467
|
|
Accounts receivable
|
48,100
|
123,104
|
|
Prepaid Expenses
|
8,333
|
17,582
|
|
Other investments
|
100,000
|
100,000
|
|
US Treasury Securities
|
25,000
|
25,000
|
|
Tax Exempt Securities
|
20,000
|
20,000
|
|
Equipment and buildings
|
138,203
|
185,348
|
|
Accumulated depreciation
|
(84,235)
|
(99,489)
|
|
Land
|
2,000
|
2,000
|
|
Total assets
|
314,848
|
?
|
|
|
|
|
Accounts payable
|
42,500
|
72,300
|
|
Notes payable in 2017
|
4,500
|
2,100
|
|
Notes payable long-term
|
26,700
|
24,300
|
|
Capital stock
|
30,000
|
30,000
|
|
Retained earnings
|
211,148
|
?
|
|
Total liabilities & stockholder's equity
|
314,848
|
?
|
Other information:
|
Sales
|
2,410,000
|
|
Interest Income
|
100,000
|
|
Dividend Income
|
15,000
|
|
Beginning Inventory
|
9,607
|
|
Direct Labor
|
403,102
|
|
Direct Materials Purchase
|
278,143
|
|
Direct Other Costs
|
493,546
|
|
Ending Inventory
|
3,467
|
|
Salaries and Wages
|
442,103
|
|
Officer Salary
|
150,000
|
|
Repairs
|
206,106
|
|
Depreciation Expense
|
15,254
|
|
Interest Expense
|
35,222
|
|
Rent Expense (operating)
|
40,000
|
|
Taxes - state income and property
|
65,101
|
|
Charitable contributions
|
35,000
|
|
Advertising Expenses
|
20,000
|
|
Payroll penalties
|
15,000
|
|
Other deductions
|
58,899
|
|
Federal Income Taxes
|
88,189
|
Interest income includes $10,000 from U.S. Government bonds and $5,000 from California State bonds.
The dividends were from Wrapper Designs, Inc. Yummy owns 5% of Wrapper's stock.
Depreciation listed above is for book purposes. For tax purposes, Yummy elects Section 179 for any eligible assets purchased during the year. In 2015, the company purchased and placed in service used equipment (7 year property) on June 1 costing $12,000. MACRS depreciation for assets placed in service prior to 2015 totaled $2,000.
Interest expense includes $32,222 for an operating loan and $3,000 for a loan to purchase the California state bonds.
Yummy distributed $100,000 in dividends to Wonka during 2016.
Hint: Yummy does not record deferred taxes.
Yummy is located at 28 Candy Highway, Candy, California, 12546. Its employer identification number is 12-345678. The corporation was formed on 7/5/2000. They are on the accrual basis of accounting with a December 31 year end. Timely quarterly federal estimated tax payments of $14,000 each were made for 2016.Yummy's 2015 federal tax was $55,000.
Prepare all required forms and schedules. Note: read the 1120 line instructions as you are completing the form 1120. If there is a line we have not studied at all, that should be ignored or marked no on the questions. The instructions lead you to all other required forms. Submit the completed return and schedules via a single PDF as per instructions. Do not submit form instructions.