$2,500,000 5,500,000 (3,500,000) $10,000,000 (250,000) $ 9,750,000 ▼ TABLE C:3-4 Melodic Musical Sales, Inc.--Book Income Statement 2022 Sales Returns Net sales Beginning inventory Purchases Ending inventory Cost of goods sold Gross profit Expenses: Depreciation Repairs General insurance Net premium-Officers' life insurance Officers' compensation Other salaries Utilities Advertising Legal and accounting fees Charitable contributions Interest expense Payroll taxes Bad debt expense Total expenses Gain on sale of equipment Interest on municipal bonds Net gain on stock sales Dividend income Net income before income taxes Federal income tax expense State income tax expense Net income $ 152,500 20,500 55,000 30,000 650,000 400,000 72,000 48,000 50,000 30,000 62,000 210,000 (4,500,000) $5,250,000 45,000 (1,825,000) 105,000 5,000 45,000 12,000 $ 3,592,000 (742,560) (75,000) $ 2,774,440 Estimated Tax Payments (Form 2220): The corporation deposited estimated tax payments as follows: $ 35,000 April 15, 2022 June 15, 2022 September 15, 2022 December 15, 2022 Total 190,000 165,000 165,000 $555,000 Taxable income in 2021 was $1.2 million, and the 2021 tax was $252,000. The corpora- tion earned its 2022 taxable income evenly throughout the year. Therefore, it does not use the annualization or seasonal methods. Assume the underpayment penalty rate remains at 7% for the second quarter of 2023 (regardless of any announced rate change). Inventory and Cost of Goods Sold (Form 1125-A): The corporation uses the periodic inventory method and prices its inventory using the lower of FIFO cost or market. Only beginning inventory, ending inventory, and purchases should be reflected on Form 1125-A. No other costs or expenses are allocated to cost of goods sold. Note: Assume the corporation is exempt from the uniform capitalization (UNICAP) rules.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Please fill PAGE 1 ONLY of Form 1120 using attached Income Statement

Melodic Musical Sales, Inc. is located at 5500 Fourth Avenue, City, ST 98765. The corporation uses the calendar year and accrual basis for both book and tax purposes. It is engaged in the sale of music instruments with an employer identification number (EIN) of XX-2024022. The company incorporated on December 31, 2018, and began business on January 2, 2019. Table C:3-3 contains balance sheet information at January 1, 2022, and December 31, 2022. Table C:3-4 presents an unaudited GAAP income statement for 2022. These schedules are presented on a book basis. Other information follows the tables.

$2,500,000
5,500,000
(3,500,000)
$10,000,000
(250,000)
$ 9,750,000
▼ TABLE C:3-4
Melodic Musical Sales, Inc.--Book Income Statement 2022
Sales
Returns
Net sales
Beginning inventory
Purchases
Ending inventory
Cost of goods sold
Gross profit
Expenses:
Depreciation
Repairs
General insurance
Net premium-Officers' life insurance
Officers' compensation
Other salaries
Utilities
Advertising
Legal and accounting fees
Charitable contributions
Interest expense
Payroll taxes
Bad debt expense
Total expenses
Gain on sale of equipment
Interest on municipal bonds
Net gain on stock sales
Dividend income
Net income before income taxes
Federal income tax expense
State income tax expense
Net income
$ 152,500
20,500
55,000
30,000
650,000
400,000
72,000
48,000
50,000
30,000
62,000
210,000
(4,500,000)
$5,250,000
45,000
(1,825,000)
105,000
5,000
45,000
12,000
$ 3,592,000
(742,560)
(75,000)
$ 2,774,440
Estimated Tax Payments (Form 2220):
The corporation deposited estimated tax payments as follows:
$ 35,000
April 15, 2022
June 15, 2022
September 15, 2022
December 15, 2022
Total
190,000
165,000
165,000
$555,000
Taxable income in 2021 was $1.2 million, and the 2021 tax was $252,000. The corpora-
tion earned its 2022 taxable income evenly throughout the year. Therefore, it does not use
the annualization or seasonal methods. Assume the underpayment penalty rate remains at
7% for the second quarter of 2023 (regardless of any announced rate change).
Inventory and Cost of Goods Sold (Form 1125-A):
The corporation uses the periodic inventory method and prices its inventory using the lower
of FIFO cost or market. Only beginning inventory, ending inventory, and purchases should
be reflected on Form 1125-A. No other costs or expenses are allocated to cost of goods sold.
Note: Assume the corporation is exempt from the uniform capitalization (UNICAP) rules.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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