Question

C. Adidas Inc. had the following balance sheet on September 30, 2019 (in thousands):

Assets		Liabilities and Stockholders’ Equity
Cash	445,421	Accounts Payable	687,121
Accounts Receivable	1,754,137	Notes Payable	553,153
Inventories	1,338,640	Other Liabilities	965,095
Equipment and		Total Liabilities	2,205,369
Other Assets	1,823,009	Stockholders’ Equity	3,155,838
Total Assets	5,361,207	Total Liabilities and Stockholders’ Equity	5,361,207

Consider the following transactions that occurred during the first half of October 2019 (in thousands):

1. Inventories were acquired for cash, P160.

2. Inventories were acquired on open account, P190.

3. Unsatisfactory shoes acquired on open account in June were returned for full credit, P40.

4. Equipment of P120 was acquired for a cash downpayment of P30 plus a 6-month promissory note of P90.

5. To encourage wider displays, special store equipment was sold on account to Makati area stores for P400. The equipment had cost P400 in the preceding month.

6. Sarah G. starred in a movie and as a favor to an Adidas executive, she agreed to display Adidas shoes in a basketball scene. No fee was paid by Adidas.

7. Cash was disbursed to reduce accounts payable, P170.

8. Collected cash on account, P180.

9. Borrowed cash from a bank, P500.

10. Sold additional common stock for cash to new investors, P900.

• Prepare an analysis showing the effects of the October transactions on the financial position of Adidas.

• Prepare a balance sheet as of October 15, 2019.

Answer 1

	All fig. in ' 000s
	Journal entries
No.	Account Title	Debit	Credit
1	Inventories	160
	Cash		160
2	Inventories	190
	Accounts payable		190
3	Accounts payable	40
	Inventories		40
4	Equipment	120
	Cash		30
	Note payable		90
5	Accounts receivable	400
	Equipment		400
6	No JE reqd.
7	Accounts payable	170
	Cash		170
8	Cash	180
	Accounts receivable		180
9	Cash	500
	Loan from Bank		500
10	Cash	900
	Common stock		900
		2660	2660

	Ledger Accounts			Net Ledger balances
No.	Account Title	Debit	Credit	Debit	Credit
	Beg. Bal.		687121
2	Accounts payable		190
3	Accounts payable	40
7	Accounts payable	170			687101
	Beg. Bal.	1754137
5	Accounts receivable	400
8	Accounts receivable		180
				1754357
	Beg. Bal.	445421
1	Cash		160
4	Cash		30
7	Cash		170
8	Cash	180
9	Cash	500
10	Cash	900		446641
	Stockholders’ Equity		3,155,838
10	Common stock		900
					3,156,738
	Beg. Bal.	1823009
4	Equipment	120
5	Equipment		400
				1822729
	Beg. Bal.	1338640
1	Inventories	160
2	Inventories	190
3	Inventories		40	1338950
9	Loan from Bank		500		500
	Beg. Bal.		553,153
4	Note payable		90		553,243
	Other liabilities		965,095		965,095
		5363867	5363867	5362677	5362677

Trial Balance
As at Oct 15, 2019	Debit	Credit
Cash	446641
Accounts receivable	1754357
Inventories	1338950
Equipment	1822729
Accounts payable		687101
Loan from Bank		500
Note payable		553,243
Other liabilities		965,095
Stockholders’ Equity		3,156,738
Total	5362677	5362677

Balance sheet
As at Oct 15, 2019
Assets		Liabilities & SH equity
Cash	446641	Accounts payable	687101
Accounts receivable	1754357	Loan from Bank	500
Inventories	1338950	Note payable	553243
Equipment	1822729	Other liabilities	965095
		Stockholders’ Equity	3156738
Total assets	5362677	Total Liabilities & SH equity	5362677