Problem 3---C Corporation (FORM 1120) On November 1, 2005, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies. Pertinent information regarding Pet Kingdom is summarized

Problem 3---C Corporation (FORM 1120)On November 1, 2005, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies.Pertinent information regarding Pet Kingdom is summarized as follows:Pet Kingdom’s business address is 1010 Northwest Parkway, Dallas, TX 75225; its telephone number is(214) 555-2211; and its e-mail address is [email protected] employer identification number is 11-1111111, and the principal business activity code is 453910.Janet and Kim each own 50% of the common stock; Janet is president and Kim is vice president of thecompany. No other class of stock is authorized.Both Janet and Kim are full-time employees of Pet Kingdom. Janet’s Social Security number is 123-456789, and Kim’s Social Security number is 987-65-4321.Pet Kingdom is an accrual method, calendar year taxpayer. Inventories are determined using FIFO andthe lower of cost or market method. Pet Kingdom uses the straight-line method of depreciation for bookpurposes and accelerated depreciation (MACRS) for tax purposes.During 2014, the corporation distributed cash dividends of $250,000.Pet Kingdom’s financial statements for 2014 are shown below. Income StatementIncomeGross SalesSales returns and allowancesNet SalesCost of goods soldGross ProfitDividends received from stockInvestments in less-than-20%owned U.S. corporationsInterest Income:State bondsCertificates of depositTotal incomeExpensesSalaries-officersJanet MortonKim WongSalaries-clerical and salesTaxes (state, local, and payroll)Repairs and maintenanceInterest Expense:Loan to purchase state bondsOther business loansAdvertisingRental expense $5,750,000(200,000)$5,550,000(2,300,000)$3,250,00043,750 $15,00020,000 $262,500262,500 $ 9,000207,000 35,000$3,328,750 $525,000725,000238,000140,000216,00058,000109,000 Depreciation*106,000Charitable contributions38,000Employee benefit programs60,000Premiums on term life40,000insurance policies on lives ofJanet Morton and Kim Wong;Pet Kingdom is the designatedbeneficiaryTotal expenses(2,255,000)Net Income before taxes$1,073,750Federal income tax(356,023)Net income per books$717,727*Depreciation for tax purposes is $136,000. You are not provided enough detailed data to complete aForm 4562 (depreciation). If you solve this problem using H&R Block Tax Software, enter the amountof depreciation on line 20 of Form 1120. Balance SheetAssetsCashTrade notes and accountsreceivableInventoriesStock InvestmentState bondsCertificates of deposit January 1, 2014$ 1,200,0002,062,500 December 31, 2014$ 1,037,7502,147,000 2,750,0001,125,000375,000400,000 3,030,0001,125,000375,000400,000 Prepaid Federal TaxBuildings and other depreciableassetsAccumulated depreciationLandOther assetsTotal assetsLiabilities and EquityAccounts PayableOther current liabilitiesMortgagesCapital stockRetained earningsTotal liabilities and equity -05,455,000 3,9775,455,000 (606,000)812,500140,000$13,714,000January 1,2014$ 2,284,000175,0004,625,0002,500,0004,130,000$ 13,714,000 (712,000)812,500128,500$13,802,727December 31, 2014$ 1,975,000155,0004,575,0002,500,0004,597,727$ 13,802,727 During 2014, Pet Kingdom made estimated tax payments of $90,000 each quarter to the IRS. Prepare aForm 1120 for Pet Kingdom for tax year 2014. Suggested software: H&R BLOCK Tax Software.