John Martin (social security number 123-45-6783) and Stan Mitchell (social security number 123-45-6784) are 55% and 45% owners of Ram, Inc.

John Martin (social security number 123-45-6783) and Stan Mitchell (social security number 123-45-6784) are 55% and 45% owners of Ram, Inc. (12-3456785), a small textile manufacturing company located at 1011 Wright Avenue, Kannapolis, NC 28083) The company’s first S election was made January 1, 1982. The following information was taken from the income statement for 2008.<BR><BR>Other income (active) 380<BR>Interest Income (taxable) 267<BR>Gross sales 1,376,214<BR>Beginning inventory 7,607<BR>Direct labor 303,102<BR>Direct materials purchased 278,143<BR>Direct other costs 149,356<BR>Ending inventory 13,467<BR>Taxes 39,235<BR>Contribution to United fund 445<BR>Contribution to Senator Browns<BR>Campaign 5,000<BR>Fines on illegal activities 34<BR>Life insurance premiums (the<BR>Corporation is beneficiary) 98<BR>Compensation to shareholder<BR>Officers (proportionate to<BR>Ownership) 34,934<BR>Salaries and wages 62,103<BR>Interest expenses 17,222<BR>Repairs 16,106<BR>Depreciation 16,154<BR>Advertising 3,246<BR>Pension plan contributors 6,000<BR>Employee benefit programs 2,875<BR>Other deductions 63,784<BR><BR><BR><BR>Jan 1,2008 Dec 31, 2008<BR>Cash 47,840 ?<BR>AR 93,100 153,136<BR>Inventories 7,607 13,467<BR>Prepaid expenses 10,333 7,582<BR>Loans to shareholders 313 727<BR>Buildings and trucks 138,203 244,348<BR>Accumulated depreciation (84,235) ?<BR>Land 1,809 16,513<BR>Life insurance 11,566 18,344<BR>Total assets 226,536 414,970<BR>Jan 1,2008 Dec 31,2008<BR>AP 52,404 82,963<BR>Notes payable (less than 1 year) 5,122 8,989<BR>Loans from shareholders 155,751 191,967<BR>Notes payable (more than 1 year) 21,821 33,835<BR>Loan on life insurance 5,312 16,206<BR>Capital stock 1,003 1,003<BR>Paid-in capital 9,559 9,559<BR>Retained earnings (8,314) ?<BR>Accumulated adjustments account 0 ?<BR>Other adjustments account 0 ?<BR>Treasury stock (16,122) (16,122)<BR>Total liabilities and capital 226,536 414,970<BR><BR>Ram’s accounting firm provides the following additional information.<BR><BR>Distributions to shareholders 290,000<BR>AMT depreciation adjustment (1,075)<BR>AMT preference, interest on private activity bonds 11,070<BR><BR>Using the above information, prepare a complete form 1120S and a Schedule K-1 for John Martin (596 Lane Street, Kannapolis, NC 28083) If any information is missing, make realistic assumptions and list them.<BR>
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