Patricks Party Palace, (P3), purveyors of fine party supplies and fun adventures, had the following transactions/situations that either happened in 2020 (or were from prior years but not discovered until 2020) that have NOT, unless otherwise indicated, been addressed/recorded. NOTE: P3 has a tax rate of 32% for the current and all future years.

11. In 2020, P3 issued 800, $1,000 bonds with detachable stock warrants for $1,000. Each warrant can be exercised for $30 and upon payment of the exercise fee, the warrant holder would receive 40 shares of P3 common stock. The bonds pay interest at 6% and have a value without the warrants of $742,000 or a price that yields 7%. The warrants without the bonds would trade for $30 per warrant.

12. P3 began granting stock options to its top executives in 2020. The exercise price on these options is $35 per share. At the date of grant, the stock price was $20 per share, the end of the year price was $18 per share and the average for the year was $16. The options vest over 5 years and the estimated value using the Black Scholes Pricing model is $3,450,000.

13. Clarences Clown College (C3), purchased 10 mini clown cars from P3 paying $120,000 up front and will pay the remaining $406,000 one month after the cars are delivered. Clarence is building a new warehouse facility and is unable to take the cars at the moment. P3 is going to hold the cars for three months and deliver them on December 1 to Clarence. The cars have been identified and set aside for Clarence.

14. Henriettas Halloween House (H3), has asked P3 to sell Henriettas uniquely designed costumes in P3 s retail establishments. Henrietta will pay for the $350 in shipping to get the costumes to P3 and will reimburse P3 for advertising costs up to $275 along with paying a 10% commission on each costume sold. Henrietta shipped 500 costumes to P3 in 2021. Each costume costs Henrietta $35 to make and the selling price placed on the costumes by P3 is $64. P3 spent $320 on advertising of Henriettas costumes in 2021 and sold 380 of the costumes. (Note ignore Henriettas entries only make those for P3).

15. P3 sells both party packages and individual party supplies and components. On May 1, Vaccine Sent Covid Packing (VSCP), Inc, a large conglomerate in the surrounding metropolitan area, hired P3 to provide a celebratory event on July 1, 2021 for the return to work of the companys entire staff. The celebration will be outside, will include employees and their families, and the goal is to provide a carnival like atmosphere. The contract stipulates an agreed upon price of $2,600,000 to be paid one-fourth up front, one-fourth on the day of the event and the remainder within 30 days. This fee is for equipment rental, setup and removal, operation of the rides and games, and catering. Each of these could be purchased by VSCP from various companies. P3 sells each of these services separately for the following cost (based on the number of people VSCP is having): Equipment/game booth rental $990,000 Equipment/game booth setup and removal 200,000 Ride and game operators 450,000 Catering 800,000