Answer Happy

While James Craig and his former classmate Paul Dolittle both
studied accounting at school, they ended up pursuing careers in
professional cake decorating. Their company, Good to Eat (GTE),
specializes in custom-sculpted cakes for weddings, birthdays, and
other celebrations. James and Paul formed the business at the
beginning of 2021, and each contributed $240,000 in exchange for a
50 percent ownership interest. GTE also borrowed $960,000 from a
local bank. Both James and Paul had to personally guarantee the
loan. Both owners provide significant services for the business.
The following information pertains to GTE’s
2021 activities:
(Leave no answer blank. Enter zero if applicable. Enter
N/A if not applicable.)
Comprehensive Problem 22-86 (Algo) Part a-1
a-1. Assume James and Paul formed GTE as
an S corporation.
Complete GTE’s Form 1120-S, page 1; Form 1120-S,
Schedule K. Use 2021 tax rules regardless of
year on tax form.
Employer identification number: 58-1111111
Form 1120-S page 1.