Form 1120 (Schedule M-1), accounting homework help

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fhtnechss

Business Finance

Description

Schedule M-1 using the information below.

Go to the IRS Forms and Publications Web site to download the Form 1120 (Schedule M-1). Prepare the Schedule M-1 using the information below.

It has been 3 years since you have seen your client, Tim Smith (SSN: XXX-YY-ZZZZ), and he has made an appointment today to have his tax return prepared. During the appointment, he informed you that he started his self-service car wash a few years ago, and his business is a success. During the conversation, you gather the following information about the business:

  • Business Name: The Car Wash
  • Business address: 1046 Broadway Street, Huntington Beach, CA 92605
  • Business description: Self-Service Car Wash
  • Employer identification number: 99-8877665
  • Date the business started: January 1, 2008

When you ask for the financial records of the business, he provides you with an income statement that he generated. You also ask for the general ledger so you can see the detail that was recorded in each of his accounts. Mr. Smith informs you that he uses the cash basis of accounting for his business.

Income Statement
December 31, 20XX

Revenue
Service Revenue$254,603
Expenses:
Advertising$2,520
Depreciation$31,250
Insurance$7,260
Interest expense$36,204
Licenses and fees$7,260
Miscellaneous$4,074
Office expense$8,911
Salaries and wages$67,460
Payroll taxes$9,444
Employee benefits$1,349
Professional fees$1,210
Repairs and maintenance$20,674
Telephone$900
Travel$1,500
Utilities$27,752
Net Income Before Taxes$26,835

The general ledger detail provides you with the following information about what is recorded under Miscellaneous expenses.



Miscellaneous Expenses
Meals and entertainment$2,074
Lease payments$2,000
Total miscellaneous expenses$4,074

When you ask the client about the lease payment, he tells you that he takes care of his mother and pays for her car lease payment with cash from the business. You confirm with Mr. Smith that his mother is not involved with his business in any way.

The depreciable property is the car wash building that cost $555,000. In your research, you learn that car wash buildings are depreciated over 15 years under the half-year convention using the Modified Accelerated Cost Recovery System (MACRS). This building is in its third year of service.

Obtain the appropriate tax forms at the following Web site, and save them to your computer:
http://www.irs.gov/formspubs/index.html?portlet=3

Part 2:
Having completed part one, identify in a 600-800 word document, what the differences are if using the Schedule M-3? As part of this discussion, explain:

  • What is the Schedule M-1 and what is its purpose?
  • How did you report information on your Schedule M-1? (Describe the components.)
  • Describe 2 book or tax differences that may be reported on the Schedule M-1.
  • When is the Schedule M-1 to be prepared?
  • Who must file a Schedule M-3? How is it filed?
  • What is the purpose of the Schedule M-3?
  • How is the information reported on the Schedule M-3? (Describe the sections or components.)
  • Describe how the Schedule M-3 differs from the Schedule M-1.
  • What are temporary differences and permanent differences?

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Explanation & Answer

Hi the attached is the form need Form 1120

1120

U.S. Corporation Income Tax Return

Form
Department of the Treasury
Internal Revenue Service
A Check if:
1a Consolidated return
(attach Form 851)
.
b Life/nonlife consolidated return .
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2 Personal holding co.
(attach Sch. PH) .
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For calendar year 2015 or tax year beginning


Income
Deductions (See instructions for limitations on deductions.)

B Employer identification number

998877665

The Car Wash

TYPE
OR
PRINT

C Date incorporated

Number, street, and room or suite no. If a P.O. box, see instructions.

1046, Broadway Street, Hungtinton Beach

01/01/2008
D Total assets (see instructions)

City or town, state, or province, country, and ZIP or foreign postal code

CA 92605

.

E Check if: (1)

427,073

$
(2)

Initial return

(3)

Final return

(4)

Name change

Address change

254,603

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1a

2
3
4

Returns and allowances . . . . .
Balance. Subtract line 1b from line 1a
Cost of goods sold (attach Form 1125-A)
Gross profit. Subtract line 2 from line 1c
Dividends (Schedule C, line 19)
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1c
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Interest
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Gross rents .
Gross royalties

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5
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Capital gain net income (attach Schedule D (Form 1120)) . . . .
Net gain or (loss) from Form 4797, Part II, line 17 (attach Form 4797)
Other income (see instructions—attach statement) . . . . . .

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8
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11
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Total income. Add lines 3 through 10 . . . . . . . .
Compensation of officers (see instructions—attach Form 1125-E)

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Salaries and wages (less employment credits)
Repairs and maintenance . . . . . .
Bad debts . . . . . . . . . . .
Rents . . . . . . . . . . . .

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17
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19

Taxes and licenses . .
Interest
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Charitable contributions .

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b
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Tax, Refundable Credits, and
Payments

2015

, 20

Name

4 Schedule M-3 attached

1a

, 2015, ending

Information about Form 1120 and its separate instructions is at www.irs.gov/form1120.

3 Personal service corp.
(see instructions) .

OMB No. 1545-0123

Gross receipts or sales .

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254,603
254,603

254,603

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20,674

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17
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7,260
36,204

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Depreciation from Form 4562 not claimed on Form 1125-A or elsewhere on return (attach Form 4562) .
Depletion . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advertising
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20
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31,250

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Pension, profit-sharing, etc., plans
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Employee benefit programs
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Domestic production activities deduction (attach Form 8903) .

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26
27
28

Other deductions (attach statement) . . . . . . . . . . . . . . . . . . . . .
Total deductions. Add lines 12 through 26 . . . . . . . . . . . . . . . . . . .
Taxable income before net operating loss deduction and special deductions. Subtract line 27 from line 11.

29a
b

Net operating loss deduction (see instructions) .
Special deductions (Schedule C, line 20) . . .

c
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32
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35
36

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Add lines 29a and 29b . . . . . . ...


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Excellent! Definitely coming back for more study materials.

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