4-1 Module 4 Homework Fluff Inc., Year 2 - 20X2 (See previous page for beginning balances) During the second year, you bought 16 Fluffs at $3,000 each and sold 13 at 7,000 each. You have arranged terms that allow you to pay 40% of the purchase price in cash and the rest in one year. You now sell Fluffs for 50% down and the rest will be paid for by the customer next year. You paid rent of $12,000. You hired a worker whom you paid $11,000. Tax rate is the same (30% of taxable income). Paid 20X1 taxes. You will pay 20X2 taxes divit year. You paid the interest to Mike on December 31. You paid office expenses of $13,000 and a dividend of $1,500. You also paid $3,000 for advertising in The Post. On February 1st you issued 50 shares of common stock for $12,000. You owe your employee $1,000 more in wages at the end of the year. So how did you do? Prepare Journal Entries, T-accounts and financial statements. Assets Current Assets Cash $30,000 Fluff, Inc. Balance Sheet December 31, 20X1 Liabilities Current Liabilities Taxes Payable $ 2,400 Inventory 6.000 Long-Term Liabilities Total Current Assets 36,000 Note Payable- Mike 10.000 Total Liabilities 12,400 Fixed Assets Land 40,000 Owners' Equity Common Stock 60,000 Other Assets Retained Earnings 5.600 Security Deposit 2,000 Total Owners' Equity 65.600 Total Assets $78.000 Total Liabilities & Owners' Equity $78.000 Fluff, Inc. Income Statement For the Year Ended December 31, 20X1 Sales $ 42,000 Cost of Goods Sold 18.000 Gross Margin 24,000 Operating Expenses Rent Expense $11.500 Advertising Expense 3.500 Total Operating Expenses 15.000 Operating Income Other Revenues &