current problem

beginning balances

bought fluffs at $3,000 each and sold for $7,000 each

All Problem 4-11 Fluff Business, 2020 Year 2, (See page 76 for beginning balanc 7,000 year, you bought 15 Fluffs and sold 12, same prices as year 1, but you page 76 for beginning balances) During the second that allow you to pay 40% of the purchase price in cash and the rest in one year. T Fluffs for 50% down and the rest will be paid for by the customer next year. You paid the same rent. You hired a worker whom you paid $11.000 (a Miami graduate). Tax rate is the same (30% of taxable income). Paid 2019 taxes. You will pay 2020 taxes next year. You paid the interest to Mike on December 31. You paid office expenses of $12,000 and a dividend of $1,000. You also paid $4,000 for advertising in The Post. On February 1" 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, Income Statement, Statement of Owners' Equity and Balance Sheet. Current Assets Cash Inventory Assets Fluff, Inc. Balance Sheet December 31, 2019 Liabilities Current Liabilities Taxes Payable Long-Term Liabilities Note Payable- Mike Total Liabilities $ 600 Total Current Assets $22,400 9.000 31,400 10,000 Fixed Assets 10.600 Land 40,000 Other Assets Security Deposit Total Assets Owners' Equity Common Stock 60,000 Retained Earnings 2.800 Total Owners' Equity 62.800 Total Liabilities & Owners' Equity $73.400 2.000 S73.400 Fluff, Inc. Income Statement For the Year Ended December 31, 2019 Sales Cost of Goods Sold Gross Margin $ 35,000 15,000 20,000 12,000 3,000 15.000 5,000 Operating Expenses Rent Expense Advertising Expense Total Operating Expenses Operating Income Other Revenues & Expenses Interest Expense Income before Taxes Tax Expense Net Income 4,000 1.200 $ 2.800 Earnings Per Share $ 15.27 Fluff, Inc. Statement of Owners' Equity For the Year Ended December 31, 2019 Common Stock Shares Amount $ 0 300 60,000 Retained Earnings $ 0 Balance, December 31, 2018 Common Stock Issued Net Income Dividends Declared Balance, December 31, 2019 2,800 (0) $2,800 Totals $ 0 60,000 2,800 (0) $62.800 300 $60,000 Fluff Inc., Year 2019 (The Fluff Business) You have decided that this university life is not for you. Instead, you have decided to go into the business of selling Fluffs. You decide to operate the business as a corporation, Fluff, Inc. On January 1. 2019 you begin with $30,000 cash; $20,000 of the money is yours and $10.000 is borrowed from your Uncle Mike. For the $20,000 which is yours, you issue yourself 100 shares of common stock. For the $10,000 borrowed from your uncle, you sign a note agreeing to pay back that amount on December 31, 2022 and you will pay interest at 10% at the end of each year. On January 1, 2019, you bought 8 Fluffs for $3,000 each. During the year you sold 5 Fluffs for $7,000 each. You also paid a security deposit of $2,000, advertising expense of $3,000 and 12 months' rent of $12,000. In addition to the cash you invested on January 1st, on August 1st you also invest a piece of land that you own into the business that is worth $40,000 in exchange for 200 more shares of stock. You pay the first year's interest to Uncle Mike of $1,000 on December 31 of 2019. Your tax rate is 30% of your income before taxes and you paid 50 % of these taxes this year and will pay the rest in 2020. So how did you do