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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 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 Expense 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 113,3002019 Federal Income Tax Deposits 250,000 Other Ta ites 20,000 Fines and Penalties (Trafc) 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 CD5 1 1,500 Dividends from US Corporations (b) 5,600 30,300 Net Income 381,400 J amro 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 beneciary 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 J amco 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 339,3 50. h. Jameo cums less than 20% of the outstanding stock of each of these corporations. J amco 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
