Playoffs Inc. Playoffs Inc. sells inventory and provides services (basketball lessons). The following balance sheet is for Playoffs Inc. for the fiscal year 2019 ending at 12/31/19: Playoffs Inc. Balance Sheet At 12/31/19 ASSETS LIABILITIES & STOCKHOLDERS' EQUITY Cash 200 Accounts Payable 85 Accounts Receivable 100 Interest Payable 15 Inventory 300 300 Bonds Payable Total current assets 600 400 Total Liabilities PP&E, gross Less Accumulated 600 Less Accumulated Depreciation PP&E, net Total Assets (200) 400 1,000 Common Stock 400 Retained Earnings 200 Total Stockholders' Equity 600 Total Liabilities and and Stockholders' Equity 1,000 Professor Lucile Faurel Financial Accounting - Mini-Case 2 A 1. The following transactions occurred after the 12/31/19 year-end. On 1/1/20, Playoffs Inc. issued common stock for $250. 2. On 1/1/20, Playoffs Inc. paid $10 to cover office rent for the period 1/1/20-12/31/20. 3. On 2/15/20, Playoffs Inc. purchased $600 of inventory (60% of the purchase was paid in cash). On 7/1/20, Playoffs Inc. sold inventory for $500 (the cost of the inventory sold is $250); all the sales were on credit. 5. On 8/1/20, the Heat signed up for lessons from Playoffs Inc.; the monthly fee for lessons is $400. Playoffs Inc. received $2,400 in cash (in advance from the Heat) for these lessons. 6. On 8/1/20, Playoffs Inc. paid $36 of interest on the bonds and bought back $100 of the bonds (Bonds Payable listed in the Balance Sheet) with no resulting gain or loss on this repurchase. 7. On 12/31/20, the following transactions should be recorded before preparing the annual financial statements: A. Annual interest rate on the bonds is 12% (make sure the annual interest expense matches the bonds outstanding during the year, otherwise make an adjustment - note that there are more than one correct way to record transactions 6 and 7A). B. The manager of Playoffs Inc. did not receive his annual salary of $80. C. $100 of depreciation on PP&E needs to be recorded. D. Playoffs Inc. provided lessons to the Lakers during November 2020. A bill for $500 was sent but the payment has not been received yet. E Playoffs Inc. declared $50 cash dividends on 12/31/20 to be paid in cash on 1/10/21. F. Playoffs Inc. used the office space during the year (from transaction 2.). G. Playoffs Inc. provided 5 months of services (lessons) to the Heat before the year-end (from transaction 5.). Record Playoffs Inc.'s journal entries (1 through 7.G.) and prepare Playoffs Inc.'s Income Statement for the 2020 fiscal year (1/1/2020-12/31/2020) and Balance Sheet as of 12/31/2020. Professor Lucile Faurel Financial Accounting - Mini-Case 2 Playoffs Inc. Playoffs Inc. sells inventory and provides services (basketball lessons). The following balance sheet is for Playoffs Inc. for the fiscal year 2019 ending at 12/31/19: Playoffs Inc. Balance Sheet At 12/31/19 ASSETS LIABILITIES & STOCKHOLDERS' EQUITY Cash 200 Accounts Payable 85 Accounts Receivable 100 Interest Payable 15 Inventory 300 300 Bonds Payable Total current assets 600 400 Total Liabilities 600 400 200 600 PP&E, gross Less Accumulated Depreciation PP&E, net Total Assets (200) 400 1,000 Common Stock Retained Earnings Total Stockholders' Equity Total Liabilities and and Stockholders' Equity 1,000 Pet Professor Lucile Faurel Financial Accounting - Mini-Case 2 Fas
