Fluff Business Year 4 (2022) You bought 11 more Fluffs for $5,000 each and sold 12 for $9,000 each, same terms as last year. Paid the money owed to suppliers (Accounts Payable) at the beginning of the year and collected all money due you at the beginning of the year (Accounts Receivable). On January 1, you took out a loan for 20,000 at 7% interest. After you took out the loan, you purchased a delivery truck for $30,000. For the loan, you will make 4 equal payments that include interest at 7%. You make the first payment on December 31st of this year. You estimate the truck will last about 6 years and then be worth $6,000. You paid your worker $14,000 and owed her $3,000 more at the end of the year. You paid eleven months of rent @ $1,000 per month. On December 31st, you paid the furniture & fixtures loan payment. Paid Uncle Mike his interest and also paid the principal balance owed on December 31. On April 1, the company issued 100 shares of common stock for $20,000. The tax rate is still 30% and during the year you paid last year's taxes. Taxes for this year will be paid next year. At the end of the year, you paid a dividend to shareholders of $8,000. Prepare Journal Entries, T-accounts, an Income Statement, a Statement of Owners' Equity, Balance Sheet and Cash Flow. 1) Year 3 info is on page 97 if you have forgotten terms/info for loans, accounts receivable, accounts payable or inventory. 2) Ending Cash should be $4,655, Total Assets $179,855, Total Current Liabilities $53,880. 3) Remember to do a Cash Flow Statement. 4) You will have 2 depreciation entries: 1 for the Vehicle and 1 Furniture and Fixtures (for a hint of what to do look at Year 3 JES) The journal entry will be Cash 20,000 Note Payable 20,000 Vehicles 30,000 Cash 30,000 To record purchase of delivery truck 5) Beginning Balances: Cash 7,300 Accts Receivable 52,000 Inventory 16,000 Prepaid Insurance 3,600 Prepaid Rent 1,000 Furniture and Fixtures 45,000 F&F Acc Depreciation (4,000) Land 40,000 Security Deposit 2,000 Accts Payable 26,400 Wages Payable 2,000 Taxes Payable 8,340 Note Payable - Mike 10,000 Note Payable - F&F 20,000 Comrnon Stock 75,000 Retained Earnings 21,160 Fluff, Inc. Balance Sheet December 31, 2021 $ 12,100 52,000 16,000 1,000 0 81,100 Liabilities Current Laibilities Accounts Payable Taxes Payable Wages Payable Note Payable - F&F Note Payable- Mike Total Current Liabilities 26,400 8,700 2,000 10,000 10,000 57.100 Assets Current Assets Cash Accounts Receivable Inventory Prepaid Rent Prepaid Insurance Total Current Assets Fixed Assets Office Equipment Less: Accumulated Depreciation Subtotal Land Net Fixed Assets Other Assets Security Deposit Total Assets $ 45,000 Long-Term Debt Note Payable - F & F Total Liabilities 10,000 67,100 (4,000) 41,000 40,000 81,000 $ 75,000 22,000 Owners' Equity Common Stock Retained Eamings Total Owners' Equity Total Liabilities and Owners' Equity 97,000 $ 2.000 164,100 $ 164,100 Fluff, Inc Statement of Changes in Owners' Equity For the Year Ended December 31, 2021 Shares Common Stock $72,000 3,000 Retained Earnings $6,700 350 10 Beginning Balance Issuance of Stock Net Income Dividends Declared Ending Balance Total $78,700 3,000 20,300 (5,000) $97,000 20,300 (5,000) $22,000 360 $75,000 Fluff, Inc. Income Statement For the Year Ended December 31, 2021 $ Sales Cost of Goods Sold Gross Margin 104,000 46,000 58,000 $ 12,000 9,000 0 4,000 Operating Expenses Rent Expense Wage Expense Insurance Expense Depreciation Expense Total Operating Expenses Income From Operations Other Revenues & Interest Expense Income before taxes Tax Expense Net Income 25,000 33,000 (4,000) 29,000 8,700 20,300 $ Eamnings Per Share $ 57.59 $20,300 / (350 x 9/12) + (360 x 3/12) EF H UKL 0 0 R S TUV w - Revenues Sales 1 Llabuities Accounts Payable 27.000 27.000 BB 26,400 3 Owners' Equity Common Stock 72,000 BB 3.000 11 75,000 104.000 4 5 Expenses Cost of Goods Sold 46,000 46.000 17 17 104000 AB D Fluff Year 3 Assets Cash BB 16,800 27,000 2 42,000 17,600 4 52,000 15,000 3,000 0 8.000 13,000 5.000 1,000 2,100 13,000 113,800 101,700 12. 100 Accounts Receivable BB 000 2,000 52.000 1 3 6 0 7 9 15 Taxes Payable 2.100 2100 BB 8,700 16 10 9 Retained Earnings 5,000 6,700 BB 20,300 17 5,000 27.000 22.000 Rent Expense 12,000 12.000 17 10 12 15 14 7 Wages Payable 1.000 1.000 BB 2,000 7 7 Waga Expense 9,000 9,000 17 - 2 . 14 Nota Payable-F&F 10,000 30.000 6 20,000 BB 3 Inventory 18.000 44.000 62.000 16,000 5 000 Note Payable, Mike 10,000 BB Interest Expense 12 1,000 14 3.000 4,000 4,000 17 Prepaid Rent BB . 1,000 Depreciation Expense 13 4000 4000 Prepaid Insurance 17 D Tax Expense 10 Furniture & Foxtures 66 o 45,000 3.700 17 Accumulated Depreciation. Furniture & Fores O B6 4000 13 Land Securty Depo 2000 Fluff Business Year 4 (2022) You bought 11 more Fluffs for $5,000 each and sold 12 for $9,000 each, same terms as last year. Paid the money owed to suppliers (Accounts Payable) at the beginning of the year and collected all money due you at the beginning of the year (Accounts Receivable). On January 1, you took out a loan for 20,000 at 7% interest. After you took out the loan, you purchased a delivery truck for $30,000. For the loan, you will make 4 equal payments that include interest at 7%. You make the first payment on December 31st of this year. You estimate the truck will last about 6 years and then be worth $6,000. You paid your worker $14,000 and owed her $3,000 more at the end of the year. You paid eleven months of rent @ $1,000 per month. On December 31st, you paid the furniture & fixtures loan payment. Paid Uncle Mike his interest and also paid the principal balance owed on December 31. On April 1, the company issued 100 shares of common stock for $20,000. The tax rate is still 30% and during the year you paid last year's taxes. Taxes for this year will be paid next year. At the end of the year, you paid a dividend to shareholders of $8,000. Prepare Journal Entries, T-accounts, an Income Statement, a Statement of Owners' Equity, Balance Sheet and Cash Flow. 1) Year 3 info is on page 97 if you have forgotten terms/info for loans, accounts receivable, accounts payable or inventory. 2) Ending Cash should be $4,655, Total Assets $179,855, Total Current Liabilities $53,880. 3) Remember to do a Cash Flow Statement. 4) You will have 2 depreciation entries: 1 for the Vehicle and 1 Furniture and Fixtures (for a hint of what to do look at Year 3 JES) The journal entry will be Cash 20,000 Note Payable 20,000 Vehicles 30,000 Cash 30,000 To record purchase of delivery truck 5) Beginning Balances: Cash 7,300 Accts Receivable 52,000 Inventory 16,000 Prepaid Insurance 3,600 Prepaid Rent 1,000 Furniture and Fixtures 45,000 F&F Acc Depreciation (4,000) Land 40,000 Security Deposit 2,000 Accts Payable 26,400 Wages Payable 2,000 Taxes Payable 8,340 Note Payable - Mike 10,000 Note Payable - F&F 20,000 Comrnon Stock 75,000 Retained Earnings 21,160 Fluff, Inc. Balance Sheet December 31, 2021 $ 12,100 52,000 16,000 1,000 0 81,100 Liabilities Current Laibilities Accounts Payable Taxes Payable Wages Payable Note Payable - F&F Note Payable- Mike Total Current Liabilities 26,400 8,700 2,000 10,000 10,000 57.100 Assets Current Assets Cash Accounts Receivable Inventory Prepaid Rent Prepaid Insurance Total Current Assets Fixed Assets Office Equipment Less: Accumulated Depreciation Subtotal Land Net Fixed Assets Other Assets Security Deposit Total Assets $ 45,000 Long-Term Debt Note Payable - F & F Total Liabilities 10,000 67,100 (4,000) 41,000 40,000 81,000 $ 75,000 22,000 Owners' Equity Common Stock Retained Eamings Total Owners' Equity Total Liabilities and Owners' Equity 97,000 $ 2.000 164,100 $ 164,100 Fluff, Inc Statement of Changes in Owners' Equity For the Year Ended December 31, 2021 Shares Common Stock $72,000 3,000 Retained Earnings $6,700 350 10 Beginning Balance Issuance of Stock Net Income Dividends Declared Ending Balance Total $78,700 3,000 20,300 (5,000) $97,000 20,300 (5,000) $22,000 360 $75,000 Fluff, Inc. Income Statement For the Year Ended December 31, 2021 $ Sales Cost of Goods Sold Gross Margin 104,000 46,000 58,000 $ 12,000 9,000 0 4,000 Operating Expenses Rent Expense Wage Expense Insurance Expense Depreciation Expense Total Operating Expenses Income From Operations Other Revenues & Interest Expense Income before taxes Tax Expense Net Income 25,000 33,000 (4,000) 29,000 8,700 20,300 $ Eamnings Per Share $ 57.59 $20,300 / (350 x 9/12) + (360 x 3/12) EF H UKL 0 0 R S TUV w - Revenues Sales 1 Llabuities Accounts Payable 27.000 27.000 BB 26,400 3 Owners' Equity Common Stock 72,000 BB 3.000 11 75,000 104.000 4 5 Expenses Cost of Goods Sold 46,000 46.000 17 17 104000 AB D Fluff Year 3 Assets Cash BB 16,800 27,000 2 42,000 17,600 4 52,000 15,000 3,000 0 8.000 13,000 5.000 1,000 2,100 13,000 113,800 101,700 12. 100 Accounts Receivable BB 000 2,000 52.000 1 3 6 0 7 9 15 Taxes Payable 2.100 2100 BB 8,700 16 10 9 Retained Earnings 5,000 6,700 BB 20,300 17 5,000 27.000 22.000 Rent Expense 12,000 12.000 17 10 12 15 14 7 Wages Payable 1.000 1.000 BB 2,000 7 7 Waga Expense 9,000 9,000 17 - 2 . 14 Nota Payable-F&F 10,000 30.000 6 20,000 BB 3 Inventory 18.000 44.000 62.000 16,000 5 000 Note Payable, Mike 10,000 BB Interest Expense 12 1,000 14 3.000 4,000 4,000 17 Prepaid Rent BB . 1,000 Depreciation Expense 13 4000 4000 Prepaid Insurance 17 D Tax Expense 10 Furniture & Foxtures 66 o 45,000 3.700 17 Accumulated Depreciation. Furniture & Fores O B6 4000 13 Land Securty Depo 2000