On February 12, 1998, Brandon Short and Michael Allen formed Angler Corporation to sell fishing tackle. Pertinent information regarding Angler is…

On February 12, 1998, Brandon Short and Michael Allen formed Angler Corporation to sell fishing tackle. Pertinent information regarding Angler is summarized as follows:1. Angler’s business address is 1717 Carlson Street, Sidney, NY 13838; its telephone number is (607) 555-2211; and its e-mail address is .2. The employer identification number is 11-1111111, and the principal business activity code is 451110.3. Brandon and Michael each owned 50% of the common stock and are president aand vice president of the company, respectively. No other class of stock is authorized.4. Both Brandon and Michael are full- time employees of Angler, and their Social Security numbers are 123-45-6789 and 978-65-4321.5. Angler is an accrual method, calendar year tax payer. Inventories are determined using FIFO and the lower cost of market method. Angler uses the straight line method of depreciation for both book and tax purposes.6. During 2008, the corporation distributed cash dividends of $80,000.7. During 2008, Angler made estimated tax payments of $37,000 each quarter to the IRS.Angler’s Financial Statements for 2008 are shown on the following pages:Income StatementIncome $2,300,000Gross Sales (80,000)Sales Returns and Allowances $2,220,000Net Sales (920,000)Cost of Goods Sold $1,300,000Gross ProfitDividends Received from stock investmentsin less-than-20%-owned U.S. Corporations 120,000Interest IncomeState Bonds 14,000Certificates of Deposit 10,000 24,000Total Income $1,444,000ExpensesSalaries-OfficersBrandon Short $160,000Michael Allen 160,000 $320,000Salaries-clerical and sales 290,000Taxes (state, local and payroll) 85,000Repairs and maintenance 56,000Interest ExpenseLoan to purchase state bonds $8,000Other business loans 12,000 20,000Advertising 6,000Rental Expense 68,000Depreciation* 40,000Charitable Contributions 15,000Employee Benefit Programs 24,000Premiums on term life insurance policies onlives of Brandon and Michael; Angler isthe designated beneficiary 16,000Total Expenses $940,000Net income before taxes $504,000Federal Income tax (146,200)Net income per books $357,800*You are not provided enough detailed data to complete a form 4562(depreciation). If yousolve this problem using TaxCut, enter the amount of deprecaiation on line 20 of Form 1120.Balance SheetAssets January 1, 2008 December 31, 2008Cash $ 480,000 $ 334,660Trade notes and accounts receivable 808,400 1,084,600Inventories 600,000 712,000State bonds 160,000 160,000Certificates of deposit 140,000 140,000Prepaid federal tax 0 1,800Buildings and other depreciable assets 240,000 240,000Accumulated depreciation (88,800) (128,800)Land 20,000 20,000Other assets 3,600 2,000Total assets 2,363,200 2,566,260Liabilities and Equity January 1, 2008 December 31, 2008Accounts payable $ 300,000 275,560Other current liabilities 80,300 40,000Mortgages 210,000 200,000Capital stock 500,000 500,000Retained earnings 1,272,900 1,550,700Total liabilities and equity $ 2,363,200 2,566,260

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