John Parsons (123-45-6781) and George Smith (123-45-6782) are 70% and 30% owners, respectively, of Premium, Inc. (11-1111111), a candy company located at 1005 16th Street, Cut and Shoot, TX 77303. The company's S corporation election was made on January 15, 2007. The following information was taken from the income statement for 2012.
On 12/31, the Company sold interest in the Land used in the trade or business for $902,000 Cash. The basis of the land was $2,000 purchased on 1/1. No estimated tax payments have been made.
Interest income $100,000
Gross sales receipts $2,410,000
Beginning inventory $9,607
Direct labor ($203,102)
Direct materials purchased ($278,143)
Direct other costs ($249,356)
Ending inventory $3,467
Salaries and wages ($442,103)
Officers' salaries ($150,000)
Repairs ($206,106)
Depreciation expense ($15,254)
Interest expense ($35,222)
Rent expense (operating) ($40,000)
Taxes ($65,101)
Charitable contributions (cash) ($20,000)
Advertising expenses ($20,000)
Payroll penalties ($15,000)
Other deductions ($59,899)
Book income $704,574
A comparative balance sheet appears below.
January 1, 2012
Cash $47,840
Accounts Receivable ?
Inventories $93,100
Prepaid Expenses $9,607
Building and Equipment $8,333
Accumulated Depreciation $138,203
Land ($84,235)
Total Assets $123,104
December 31, 2012
Cash $3,467
Accounts Receivable $17,582
Inventories $185,348
Prepaid Expenses ?
Building and Equipment $123,104
Accumulated Depreciation $3,467
Land $17,582
Total Assets $214,848
Accounts Payable $42,500
Notes Payable-Short Term $4,500
Notes Payable-Long Term $26,700
Loan to Fenway $72,300
Federal Taxes Payable $2,100
Capital Stock $24,300
Retained Earnings $50,000
Total Liabilities and Equity $214,848
Premium's accounting firm provides the following additional information.
Distributions to shareholders $100,000
Beginning Balance, Accumulated adjustments account $111,148
W-2 wages for QBI $795,205
Using the preceding information, prepare a complete Form Schedule K-1s for John Parsons and George Smith, 5607 20th Street, Cut and Shoot, TX 77303. If any information is missing, make realistic assumptions.