TAX RETURN PROBLEM
H&R BLOCK At Home
1. Dana Mitchell (123-45-6781) and Deborah Marshall (123-45-6782) are 70% and 30% owners of Dana, Inc. (11-1111111), a candy company located at 145 Avenue A, Dime Box, TX 77823. The company's S corporation election was made on January 15, 2005. The following information was taken from the income statement for 2009. Tax-exempt income $ 10,000 Net rent income 50,000 Interest income 100,000 Gross sales receipts 1,100,000 Beginning inventory 9,607 Direct labor 103,102 Direct materials purchased 178,143 Direct other costs 49,356 Ending inventory 3,467 Salaries and wages 42,103 Officers' salaries 50,000 Repairs 16,106 Depreciation 15,254 Interest expense $ 5,222 Rent expense (operating) 40,000 Taxes 15,101 Charitable contributions (cash) 20,000 Advertising expenses 30,000 Payroll penalties 15,000 Other deductions 49,899 Net income 624,574
A comparative balance sheet appears below.
January 1, 2009 December 31, 2009 Cash $ 47,840 $ Accounts receivable 93,100 123,104 Inventories 9,607 3,467 Prepaid expenses 8,333 17,582 Building and equipment 138,203 185,348 Accumulated depreciation (84,235) Land 2,000 2,000 Total assets $214,848 $764,422 Accounts payable $ 42,500 $ 72,300 Notes payable (less than 1 year) 4,500 2,100 Notes payable (more than 1 year) 26,700 24,300 Capital stock 30,000 30,000 Retained earnings 111,148 Total liabilities and capital $214,848 $764,422
Dana's accounting firm provides the following additional information. Distributions to shareholders $100,000
Using the above information, prepare a complete Form 11205 and a Schedule K-1 for Dana Mitchell, 545 Avenue C, Dime Box, TX 77823. If any information is missing, make realistic assumptions and list them.