Problem 3—C Corporation (FORM 1120)On November 1, 2005, Janet Morton and Kim Wong formed Pet Kingdom, Inc., to sell pets and pet supplies.Pertinent information regarding Pet Kingdom is summarized as follows:Pet Kingdom’s business address is 1010 Northwest Parkway, Dallas, TX 75225; its telephone number is(214) 555-2211; and its e-mail address is [email protected] employer identification number is 11-1111111, and the principal business activity code is 453910.Janet and Kim each own 50% of the common stock; Janet is president and Kim is vice president of thecompany. No other class of stock is authorized.Both Janet and Kim are full-time employees of Pet Kingdom. Janet’s Social Security number is 123-456789, and Kim’s Social Security number is 987-65-4321.Pet Kingdom is an accrual method, calendar year taxpayer. Inventories are determined using FIFO andthe lower of cost or market method. Pet Kingdom uses the straight-line method of depreciation for bookpurposes and accelerated depreciation (MACRS) for tax purposes.During 2014, the corporation distributed cash dividends of $250,000.Pet Kingdom’s financial statements for 2014 are shown below. Income StatementIncomeGross SalesSales returns and allowancesNet SalesCost of goods soldGross ProfitDividends received from stockInvestments in less-than-20%owned U.S. corporationsInterest Income:State bondsCertificates of depositTotal incomeExpensesSalaries-officersJanet MortonKim WongSalaries-clerical and salesTaxes (state, local, and payroll)Repairs and maintenanceInterest Expense:Loan to purchase state bondsOther business loansAdvertisingRental expense $5,750,000(200,000)$5,550,000(2,300,000)$3,250,00043,750 $15,00020,000 $262,500262,500 $ 9,000207,000 35,000$3,328,750 $525,000725,000238,000140,000216,00058,000109,000 Depreciation*106,000Charitable contributions38,000Employee benefit programs60,000Premiums on term life40,000insurance policies on lives ofJanet Morton and Kim Wong;Pet Kingdom is the designatedbeneficiaryTotal expenses(2,255,000)Net Income before taxes$1,073,750Federal income tax(356,023)Net income per books$717,727*Depreciation for tax purposes is $136,000. You are not provided enough detailed data to complete aForm 4562 (depreciation). If you solve this problem using H&R Block Tax Software, enter the amountof depreciation on line 20 of Form 1120. Balance SheetAssetsCashTrade notes and accountsreceivableInventoriesStock InvestmentState bondsCertificates of deposit January 1, 2014$ 1,200,0002,062,500 December 31, 2014$ 1,037,7502,147,000 2,750,0001,125,000375,000400,000 3,030,0001,125,000375,000400,000 Prepaid Federal TaxBuildings and other depreciableassetsAccumulated depreciationLandOther assetsTotal assetsLiabilities and EquityAccounts PayableOther current liabilitiesMortgagesCapital stockRetained earningsTotal liabilities and equity -05,455,000 3,9775,455,000 (606,000)812,500140,000$13,714,000January 1,2014$ 2,284,000175,0004,625,0002,500,0004,130,000$ 13,714,000 (712,000)812,500128,500$13,802,727December 31, 2014$ 1,975,000155,0004,575,0002,500,0004,597,727$ 13,802,727 During 2014, Pet Kingdom made estimated tax payments of $90,000 each quarter to the IRS. Prepare aForm 1120 for Pet Kingdom for tax year 2014. Suggested software: H&R BLOCK Tax Software.