In: Accounting
On Jan.1 of the current year, Mr. Radon and Mr. Helix established operations of their partnership Smackey Technologies, a manufacturer of electronic components. Both partners actively participate equally. Smackey’s income statement for the current calendat year, is presented below.
Sales $1,000,000
Cost of sales (410,000)
Gross profit 590,000
Operating expenses
Salaries and wages (excluding partners) 165000
Guaranteed payments to partners 100000
Depreciation of machinery and equipment 145000
Partners' health insurance premiums 10000
Contributions to pension plans (excluding partners) 12000
Contributions to Keogh pension plan 6000
Charitable contributions 22000
operating ordinary income 130000
other income (loss) :
interest 2500
rental income net (1800)
total 700
total net income 130,700
Other information:
Radon and Helix share profits and losses equally
Guaranteed payments to partners are for services rendered and are determined without regard to partnership income.
In addition to the guaranteed payments, Radon and Helix each drew $35,000.
These drawings were unrelated to the guaranteed payments Guaranteed payments and partners' health insurance premiums are divided equally between Radon and Helix.
The charitable contribution was made in cash to a qualified charitable organization
Question 1: Enter the appropriate values in the 1065 tax form
Question 2: Using the data provided in the tab titled “Information,” enter the approriate values in the schedule K and K-1 below.
Sales | 1,000,000 | |
Cost of Sales | (410,000) | |
Gross Profit | 590,000 | (1000000-410000) |
Operating Income | 130,000 | |
Rental Income | (1,800) | |
Interest | 2,500 | |
Other Income | 130,700 | |
Operating Expenses | ||
Salaries and Wages | 165,000 | |
Payments to Partners | 100,000 | |
Depreciation | 145,000 | |
Health Insurance | 10,000 | |
Pension | 12,000 | |
Keogh Pension Plan | 6,000 | |
Charitable | 22,000 | |
Total Expenses | 460,000 | |
Net Profit | 260,700 | (590000+130700-460000) |
Computation of Tax Profit | |
Net Profit as per Profit and loss | 260,700 |
Add: | |
Charitable | 22,000 |
Less: | |
Interest | 2,500 |
Rent Loss | (1,800) |
Gross Total Income | 282,000 |
Less : Donations | 22,000 |
Net taxable Income | 260,000 |
Unable to See Tab Titled "Information and hence ended the answer with net taxtable income