You have decided that this university life is not for you. Instead, you have decided to go into the business of selling fluffs.

The Fluff Inc., Year 1 (2014)  [The fluff business]

You have decided that this university life is not for you. Instead, you have decided to go into the business of selling fluffs. You decide to operate the business as a corporation, Fluff, Inc. On January 1, 2014 you begin with $30,000 cash; $20,000 of the money is yours and $10,000 is borrowed from your uncle mike. For the $20,000 which is yours, you issue yourself 100 shares of common stock. For the $10,000 borrowed from your uncle, you sign a note agreeing to pay back that amount on December 31, 2017 and you will pay interest at 10% at the end of each year. On January 1, 2014 you bought 8 fluffs for $3,000 each. During the year you sold 5 fluffs for $7,000 each. You also paid a security deposit of $2,000 advertising expense of $3,000 and 12 month’s rent of $12,000. In addition to the cash you invested on January 1^st, on august 1^st you also invest a piece of land that you own into the business that is worth $40,000 in exchange for 200 more shares of stock. You pay the first year’s interest to uncle mike of $1,000 on december 31, 2014. Your tax rate is 30% of your income before taxes and you paid 50% of these taxes so how did you do?

The Fluff Inc., Year 2 (2015)  [The fluff business]

During the second year, you bought 14 fluffs and sold 12, same prices as year 1, but you have arranged terms that allow you to pay 25% of the purchase price in cash and the rest in one year.

(Cont…)