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Olive Corporation was formed and began operations on January 1, 2018. The corporation’s income statement for the year and the balance sheet at year-end are presented below.
The corporation made estimated tax payments of $5,000 and the corporation’s book federal income tax expense is equal to the federal tax liability. Assume any overpayment is credited to the 2019 estimated tax.
Required:
Prepare Form 1120.
Olive Corporation was formed and began operations on January 1, 2018. The corporation’s income statement for the year and the balance sheet at year-end are presented below.The Olive Corporation Income Statementfor the Year Ended December 31, 2018Gross income from operations$270,000Qualified dividends received from a 35percent-owned domestic corporation20,000Total gross income$290,000Cost of goods sold(110,000)Total income$180,000Other expenses:Compensation of officers$77,000Salaries and wages30,000Bad debts (direct charge-offs)9,000Repairs3,000Depreciation for book and tax purposes10,000Advertising2,000Payroll taxes16,000Total other expenses(147,000)Net income (before federal income tax expense)$33,000The Olive Corporation Balance Sheetas of December 31, 2018Assets:Cash$30,000Accounts receivable20,000Inventory (at cost)70,000Equipment90,000Less: accumulated depreciation(10,000)Total assets$200,000Liabilities and owners’ equity:Accounts payable$ 6,200Note payable (due in 10 years)85,000Common stock80,000Retained earnings28,800Total liabilities and owners’ equity$200,000
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