Knoxville Musical Sales Inc. is located at 5500 Kingston PikeKnoxville TN 37919. The corporation uses the calendar year andaccrual basis for both book and tax purposes. It is engaged in thesale of musical instruments with an employer identification number(EIN) of 75-2010008. The company incorporated on December 31 2004and began business on January 2 2005. Table C:3-3 contains balancesheet information at January 1 2008 and December 31 2008. TableC:3-4 presents an income statement for 2008. These schedules arepresented on a book basis. Other information follows.