(Solved): Problem 1-2 You have decided to start a business selling elephants. You form a corporation, Ernie's ...

Problem 1-2 You have decided to start a business selling elephants. You form a corporation, Ernie's Elephants, Inc. You paid

per share for 1,000 shares of stock on January 1, 20X0. Next the company borrowed

from your Aunt Suzie. For the

borrowed from your aunt, the company agrees to pay back that amount on December 31,20X6 and to pay interest at

at the end of each year. On January 1,20X0, the company bought 9 elephants for

each. During the year, it sold 5 elephants for

each. The company also paid a security deposit of

, advertising expense of

, and 12 months of rent,

. Elephants, Inc. bought a delivery van on December

that cost

, putting

down on the van and agreeing to pay the balance next year. On December 31 the company paid the first year's interest to Aunt Suzie of

. The tax rate is

of income before taxes and the taxes will be paid in 20X1. Using blank Journal Entries, T-accounts from the "Your Stuff" section of the MAP, prepare Journal Entries, T-accounts, an Income Statement, Statement of Owner's Equity and a Balance Sheet.