JAMCO Turf

A Partnership

For the Year Ended December 31, 2019

Jamco Turf was organized on February 22, 2019, by Jon Jones and Billy Burt. Jon contributed $270,000 cash and SBUX stock (acquired 01/01/2017) worth $30,000 for a 60% interest, and Billy contributed $200,000 cash for a 40% interest. Jon's social security number is 123-45-6789 and Billy's is 987-65-4321. Jamco's employer ID number is 12-3456789. Jamco began business on March 1, 2019. Jamco is a commercial landscaping business located at 118812 Josey Lane, Louisville, KY 40018. Jamco uses the accrual method of accounting, the first-in, first-out (FIFO) inventory method, and a calendar year.

Jamco's 2019 income statement, balance sheet, and statement of changes in retained earnings are on the following pages.

Jamco Turf

Income Statement

For the Year Ended December 31, 2019

Sales 4,700,000

Returns and Allowances (50,000)

4,650,000

Beginning Inventory 0

Purchases 4,050,000

4,050,000

Ending Inventory (1,700,000)

(2,350,000)

Gross Profit 2,300,000

Expenses

Salaries (a) 980,000

Depreciation (b) 75,400

Advertising 30,000

Bad Debts 39,000

Rent 100,000

Interest (c) 39,500

Utilities 38,300

Delivery Expenses 34,900

Office Supplies 46,200

Repairs and Maintenance 29,000

Organization Expense (d) 6,000

Meals and Entertainment 80,000

Insurance Expense (e) 36,000

Payroll Taxes 113,300

2019 Federal Income Tax Deposits 250,000

Other Taxes 20,000

Fines and Penalties (Traffic) 1,000

Accounting and Legal 12,000

Charitable Contributions - Red Cross 18,000

Real Estate Taxes on Investment Land 800 1,949,400

350,600

Other Income

Gain on Sale of Stock (f) 4,000

Sale of Delivery Truck (g) 8,600

Interest on County Tax Exempt Bonds 1,100

Interest on CDs 11,500

Dividends from US Corporations (h) 5,600 30,800

Net Income 381,400

Jamco Turf

Notes to Income Statement

a.Includes salaries: Jon Jones $200,000, Billy Burt $50,000

b.Depreciation for tax purposes $112,700

c.$2,500 is allocable to the investments in stock. The remainder is related to Jamco's business.

d.$6,000 in fees were incurred in organizing Jamco.

e.Includes $5,000 of premiums for term life insurance on Jon and Billy. Jamco is the beneficiary of these policies. In addition, $4,300 of the health insurance premiums are attributable to coverage for Jon and his family, and $3,900 are attributable to coverage for Billy and his family.

f.Sold 500 shares of SBUX stock for $35,000 on December 1, 2019. The stock had been purchased by Jon on July 1, 2004 for $20,000 and was contributed by him on February 22, 2019, when it was worth $30,000. Also, on December 1, 2019, sold 100 shares of Grand View, Inc. for $2,000. The stock had been purchased on March 1, 2019 for $3,000. At no time did Jamco own more than 1% of the outstanding stock of these corporations.

g.Sold a delivery truck on September 23, 2019 for $35,000. The truck had originally been purchased on May 1, 2019 for $33,400. Depreciation taken for book purposes was $7,000. Depreciation taken for tax purposes was $9,350.

h.Jamco owns less than 20% of the outstanding stock of each of these corporations.

Jamco Turf

Balance Sheet

December 31, 2019

Assets

Cash 113,000

Accounts Receivable 300,000

Less Allowance for Bad Debts 29,000 271,000

Inventory 1,700,000

Tax Exempt Securities 17,000

Other Current Assets 40,000

Other Investments 85,000

Buildings and Depreciable Assets (net) 165,400

Land 70,000

Total Assets 2,461,400

Liabilities and Equity

Accounts Payable 375,000

Mortgages, Notes Payable in < 1 year 185,000

Other Current Liabilities 70,000

Mortgages, Notes Payable in > 1 year 1,190,000

Jon Capital Account 300,000

Billy Capital Account 200,000

Jon Current Account 84,900

Billy Current Account 56,600

Total Liabilities and Equity 2,461,400

Jamco Turf

Statement of Changes in Current Account

For the Year Ended December 31, 2019

Beginning Balance 0

Income 381,400

Distributions (240,000)

Balance, December 31, 2019 141,400

Other Information

Addresses for the owners are:

Jon Jones, 3513 Jackson Street, Louisville, KY 40018

Billy Burt, 2532 Sugarbush, Louisville, KY 40018

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