(solution) Supplemental information for Phoenix Medical, Inc. Calendar year

(solution) Supplemental information for Phoenix Medical, Inc. Calendar year

This is a corporate taxation question.

I’m having some trouble filling out a mock Form 1120 for an assignment. Specifically schedule K and M-1. The information in M-1 is absolutely not correct. Can someone please take a look at this and advise? The form and the other information provided is attached (the spreadsheet is all we’re provided with). 

Supplemental information for Phoenix Medical, Inc.
Calendar year ending 12/31/2014:
Page 1 Information:
Company Name: B.
C. Phoenix Medical, Inc.
1122 Three Ave.
Phoenix, AZ 85001
EIN: 24-5678901
Date Incorporated: 3/27/2006 Page 2 Information:
1.
Dividends were received from Big Labs. Phoenix Medical holds a 15% ownership of Big Labs.
Schedule K Information:
Line 2. a. Business Activity Code: 621111
b. Business Activity: Medical
c. Product or Services: Skin Care
Line 3.
Not a subsidiary.
Line 4.
a. Not owned by a foreign or domestic entity.
b. Owned equally by three individuals (33.33%).
Line 5.
Not an owner of 20% or more of a foreign or domestic corporation or partnership.
Line 6-11. No.
Line 12. NOL carryforward of $1,535,624 is available to offset 2014 income.
Line 13 & 14. No.
Line 15. Yes and Yes.
Line 16-18. No. Phoenix Medical 7:08 AM
11/04/15
Accrual Basis Balance Sheet As of December 31, 2014 Dec 31, 14 Dec 31, 13 $ Change ASSETS
Current Assets
Checking/Savings
10001 · Checking 609,842.00 277,131.00 332,711.00 10010 · Savings 557,392.23 325,541.23 231,851.00 10020 · Cash Maximizer 558,380.05 69,672.05 488,708.00 1,725,614.28 672,344.28 1,053,270.00 260,990.00 826,113.00 -565,123.00 260,990.00 826,113.00 -565,123.00 75,000.00 0.00 75,000.00 75,000.00 0.00 75,000.00 2,061,604.28 1,498,457.28 563,147.00 15000 · Furniture and Equipment 40,316.00 40,316.00 0.00 15500 · Leasehold Improvements 506,889.00 506,889.00 0.00 1,399,776.00 1,129,888.00 269,888.00 -1,568,773.00 -1,240,071.00 -328,702.00 378,208.00 437,022.00 -58,814.00 3,206,518.00 2,306,518.00 900,000.00 866,507.20 364,352.20 502,155.00 4,073,025.20
6,512,837.48 2,670,870.20
4,606,349.48 1,402,155.00
1,906,488.00 122,601.00 107,245.00 15,356.00 122,601.00 107,245.00 15,356.00 39,065.51 34,742.51 4,323.00 39,065.51 34,742.51 4,323.00 0.00 26,375.00 -26,375.00 Total Checking/Savings
Accounts Receivable
11000 · Accounts Receivable
Total Accounts Receivable
Other Current Assets
18100 · Loan to Shareholder
Total Other Current Assets
Total Current Assets
Fixed Assets 16100 · Medical Equipment
17000 · Accumulated Depreciation
Total Fixed Assets
Other Assets
18001 · Investment in Big Labs
18050 · Investment in R&D Company
Total Other Assets
TOTAL ASSETS
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Accounts Payable
20001 · Accounts Payable
Total Accounts Payable
Credit Cards
20100 · Credit Cards
Total Credit Cards
Other Current Liabilities
20200 · Accrued Salaries
Total Other Current Liabilities 0.00 26,375.00 -26,375.00 161,666.51 168,362.51 -6,696.00 28001 · Business Loan 1,207,401.72 1,333,423.72 -126,022.00 Total Long Term Liabilities 1,207,401.72 1,333,423.72 -126,022.00 1,369,068.23 1,501,786.23 -132,718.00 Total Current Liabilities
Long Term Liabilities Total Liabilities Page 2 of 11 7:08 AM
11/04/15
Accrual Basis Phoenix Medical Balance Sheet As of December 31, 2014 Dec 31, 14 Dec 31, 13 $ Change Equity
30100 · Capital Stock 1,000.00 1,000.00 0.00 -400,000.00 0.00 -400,000.00 32000 · Retained Earnings 3,103,563.25 3,103,563.25 0.00 Net Income 2,439,206.00 0.00 2,439,206.00 Total Equity
TOTAL LIABILITIES & EQUITY 5,143,769.25
6,512,837.48 3,104,563.25
4,606,349.48 2,039,206.00
1,906,488.00 31400 · Shareholder Distributions Page 3 of 11 Phoenix Medical 7:09 AM
11/04/15
Accrual Basis Profit & Loss January through December 2014
Jan – Dec 14 Ordinary Income/Expense
Income
43700 · Fee for Service Income
47300 · Refunds
Total Income 5,615,706.00
-17,633.00
5,598,073.00 Expense
60000 · Advertising and Promotion
60200 · Automobile Expense 1,252.00
11,961.00 60400 · Bank Service Charges 8,808.00 61000 · Business Licenses and Permits 5,611.00 61100 · Charitable Contributions (Cash) 100,000.00 61700 · Computer and Internet Expenses 13,575.00 62400 · Depreciation Expense
62500 · Dues and Subscriptions 628,702.00
8,327.00 62600 · Equipment Rental
62610 · Laser Facility Rent
62600 · Equipment Rental – Other
Total 62600 · Equipment Rental
63300 · Insurance Expense
63400 · Interest Expense 14,979.00
201,106.00
216,085.00
55,356.00
63,678.00 63600 · Laboratory Testing Fees 121,653.00 64300 · Meals and Entertainment 8,362.50 64400 · Medical Records and Supplies 103,456.00 66700 · Professional Fees 123,945.00 67200 · Repairs and Maintenance 18,855.00 67800 · Salaries and Wages
67810 · Officers Compensation 940,000.00 67800 · Salaries and Wages – Other 321,580.00 Total 67800 · Salaries and Wages 1,261,580.00 68000 · Taxes
68010 · Payroll Taxes
68020 · State Tax
Total 68000 · Taxes 206,103.00
30,652.00
236,755.00 68500 · Uniforms 16,121.00 68600 · Utilities 30,364.00 Total Expense
Net Ordinary Income 3,034,446.50
2,563,626.50 Other Income/Expense
Other Income
70200 · Interest Income
70222 · Tax Exempt Interest
70300 · Sublease Rents
71000 · Dividends 833.00
0.00
240,000.00
80,000.00 Page 4 of 11 7:09 AM
11/04/15
Accrual Basis Phoenix Medical Profit & Loss January through December 2014
Jan – Dec 14 75000 · Gain on Sale of Assets
Total Other Income 75,000.00
395,833.00 Other Expense
M-1 AC · M-1 Accrual to Cash Adjustment
Total Other Expense
Net Other Income
Net Income 13,597.00
13,597.00
382,236.00
2,945,862.50 Schedule M-1 Line 10 Page 5 of 11 Phoenix Medical 7:09 AM
11/04/15
Accrual Basis Profit & Loss January through December 2014 Ordinary Income/Expense
Income
43700 · Fee for Service Income
47300 · Refunds
Total Income
Expense
60000 · Advertising and Promotion
60200 · Automobile Expense
60400 · Bank Service Charges
61000 · Business Licenses and Permits
61100 · Charitable Contributions (Cash)
61700 · Computer and Internet Expenses
62400 · Depreciation Expense
62500 · Dues and Subscriptions
62600 · Equipment Rental
62610 · Laser Facility Rent 1354238
460440.9 62600 · Equipment Rental – Other
Total 62600 · Equipment Rental
63300 · Insurance Expense
63400 · Interest Expense
63600 · Laboratory Testing Fees
64300 · Meals and Entertainment
64400 · Medical Records and Supplies
66700 · Professional Fees
67200 · Repairs and Maintenance
67800 · Salaries and Wages
67810 · Officers Compensation
67800 · Salaries and Wages – Other
Total 67800 · Salaries and Wages
68000 · Taxes
68010 · Payroll Taxes
68020 · State Tax
Total 68000 · Taxes 13597 68500 · Uniforms
68600 · Utilities
Total Expense
Net Ordinary Income
Other Income/Expense
Other Income
70200 · Interest Income
70222 · Tax Exempt Interest
70300 · Sublease Rents
71000 · Dividends Page 6 of 11 7:09 AM
11/04/15
Accrual Basis Phoenix Medical Profit & Loss January through December 2014 75000 · Gain on Sale of Assets
Total Other Income
Other Expense
M-1 AC · M-1 Accrual to Cash Adjustment
Total Other Expense
Net Other Income
Net Income Page 7 of 11 Phoenix Medical 7:09 AM
11/04/15
Accrual Basis Profit & Loss January through December 2014 Ordinary Income/Expense
Income
43700 · Fee for Service Income
47300 · Refunds
Total Income
Expense
60000 · Advertising and Promotion
60200 · Automobile Expense
60400 · Bank Service Charges
61000 · Business Licenses and Permits
61100 · Charitable Contributions (Cash)
61700 · Computer and Internet Expenses
62400 · Depreciation Expense
62500 · Dues and Subscriptions
62600 · Equipment Rental
62610 · Laser Facility Rent
62600 · Equipment Rental – Other 1019238 Total 62600 · Equipment Rental
63300 · Insurance Expense
63400 · Interest Expense
63600 · Laboratory Testing Fees
64300 · Meals and Entertainment
64400 · Medical Records and Supplies
66700 · Professional Fees
67200 · Repairs and Maintenance
67800 · Salaries and Wages
67810 · Officers Compensation
67800 · Salaries and Wages – Other
Total 67800 · Salaries and Wages
68000 · Taxes
68010 · Payroll Taxes
68020 · State Tax
Total 68000 · Taxes
68500 · Uniforms
68600 · Utilities
Total Expense
Net Ordinary Income
Other Income/Expense
Other Income
70200 · Interest Income
70222 · Tax Exempt Interest
70300 · Sublease Rents
71000 · Dividends Page 8 of 11 7:09 AM
11/04/15
Accrual Basis Phoenix Medical Profit & Loss January through December 2014 75000 · Gain on Sale of Assets
Total Other Income
Other Expense
M-1 AC · M-1 Accrual to Cash Adjustment
Total Other Expense
Net Other Income
Net Income Page 9 of 11 Phoenix Medical 12:55 PM
10/26/15
Accrual Basis Profit & Loss January through December 2014 Jan – Dec 14
Ordinary Income/Expense
Income
43700 · Fee for Service Income
47300 · Refunds
Total Income 5,050,583.00
-17,633.00
5,032,950.00 Expense
60000 · Advertising and Promotion
60200 · Automobile Expense 1,252.00
11,961.00 60400 · Bank Service Charges 8,808.00 61000 · Business Licenses and Permits 5,611.00 61100 · Charitable Contributions (Cash) 60,000.00 61700 · Computer and Internet Expenses
62400 · Depreciation Expense
62500 · Dues and Subscriptions 13,575.00
628,702.00
8,327.00 62600 · Equipment Rental
62610 · Laser Facility Rent
62600 · Equipment Rental – Other
Total 62600 · Equipment Rental
63300 · Insurance Expense
63400 · Interest Expense 14,979.00
201,106.00
216,085.00
55,356.00
63,678.00 63600 · Laboratory Testing Fees 121,653.00 64300 · Meals and Entertainment 16,725.00 64400 · Medical Records and Supplies 103,456.00 66700 · Professional Fees 123,945.00 67200 · Repairs and Maintenance 18,855.00 67800 · Salaries and Wages
67810 · Officer Compensation 940,000.00 67800 · Salaries and Wages – Other 321,580.00 Total 67800 · Salaries and Wages 1,261,580.00 68000 · Taxes
68010 · Payroll Taxes
68020 · State Tax
Total 68000 · Taxes
68500 · Uniforms
68600 · Utilities
Total Expense
Net Ordinary Income 206,103.00
35,041.00
241,144.00
16,121.00
30,364.00
3,007,198.00
2,025,752.00 Other Income/Expense
Other Income
70200 · Interest Income
70222 · Tax Exempt Interest
70300 · Sublease Rents 833.00
17,621.00
240,000.00 12:55 PM
10/26/15
Accrual Basis Phoenix Medical Profit & Loss January through December 2014 Jan – Dec 14
71000 · Dividends 80,000.00 75000 · Gain on Sale of Assets 75,000.00 Total Other Income
Net Other Income
Net Income
INFORMATION ONLY – NOT TO INPUT. 413,454.00
413,454.00
2,439,206.00 Schedule M-1 Line 1