Name of organization: Beard Corporation Address: 999 Main Street Contact phone n
ID: 2586213 • Letter: N
Question
Name of organization: Beard Corporation Address: 999 Main Street Contact phone number: (XXX) 555-6403 Email: beardcorp@net.net EIN: 64-6499003
Entity type: Corporation Authorize IRS to discuss return: Yes
Date incorporated: January 1, 2011
Ofcer signing the return: Omega Beard (President) Of cer SSN: 747-64-3001 During the year, the Beard Corporation had the following income and (expenses):
Cash sales: $87,535
Customer refunds: ($ 1,750)
Interest income: $ 425
Royalties: $ 1,575
Ofcer compensation: ($25,000)
Book/tax depreciation: ($ 4,250)
Interest expense: ($ 1,975)
Taxes and licenses: $ 750
Advertising: ($ 2,000)
Utilities: ($ 4,725)
Packaging: ($ 4,290)
1) What are the total deductions reported on Form 1120, line 27?
A) $40,990
B) $42,740
C) $42,990
D) $44,740
2) What is the gross sales amount reported on Form 1120, line 1a?
A) $85,785
B) $87,535
C) $87,960
D) $89,535
Explanation / Answer
1 Total deductions is $42990 $ remarks Officer compensation (25,000) Salaries paid Book/tax depn (4,250) interest expense (1,975) Advertising (2,000) Utilities (4,725) Taxes & licenses (750) packaging (4,290) Total deductions : (42,990) Note: All the expenses incurred for the purpose of business, can be deducted and net income to be computed. Taxes & licenses are expense items and hence deducted. (in question shown incorrectly as income) 2 Gross sales to be reported in form 1120 is $87535 Gross sales = Sales before customer returns Gross sales = $87535 Note: sales details given in the question is assumed to be gross before deducting customer returns. customer returns should be shown separately and net sales after deducting customer returns should be disclosed. Royalty income and any other income should be separately presented and should not be clubbed with sales.
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