year Playoffs Inc. Playoffs Inc. sells inventory and provides services (basketball lessons). The following balance sheet is for Playoffs Inc. for the fiscal 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 Bonds Payable 300 Total current assets 600 Total Liabilities 400 600 PP&E, gross 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 The following transactions occurred after the 12/31/19 year-end. 1. 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). 4. 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. 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. Balance Sheet Income Statement Transaction Cash Asset + Noncash Assets Liabil- ities Contrib. Capital + Earned Rev. Capital enues Expen- ses Net Income 11 11 = + Accounts + Retained Service WORLD SERIES INC. INCOME STATEMENT for the year ended December 31, 2020 WORLD SERIES INC. BALANCE SHEET as of December 31, 2020 year Playoffs Inc. Playoffs Inc. sells inventory and provides services (basketball lessons). The following balance sheet is for Playoffs Inc. for the fiscal 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 Bonds Payable 300 Total current assets 600 Total Liabilities 400 600 PP&E, gross 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 The following transactions occurred after the 12/31/19 year-end. 1. 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). 4. 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. 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. Balance Sheet Income Statement Transaction Cash Asset + Noncash Assets Liabil- ities Contrib. Capital + Earned Rev. Capital enues Expen- ses Net Income 11 11 = + Accounts + Retained Service WORLD SERIES INC. INCOME STATEMENT for the year ended December 31, 2020 WORLD SERIES INC. BALANCE SHEET as of December 31, 2020