Question

TimmyL Baseball Card Co. buys and sells baseball cards of a famous (ex) San Francisco Giants baseball player. The company was formed in 2015. The post-closing trial balance of that company for the end of operations in that first year is:

TimmyL Baseball Card Co.

Trial Balance

December 31, 2015

Account                                   Debit                       Credit

Cash                                                $250,000

Accounts Receivable                                   80,000

Allowance for Bad Debts                                                $ 8,000

Inventory                                 600,000

Supplies                                     10,000

Prepaid Advertising                                             9,000

Land                                                200,000

Building                                  500,000

Accumulated Depreciation-B.                                            8,000

Patent                                                 95,000

Accounts Payable                                                        100,000

Dividends Payable                                                  30,000

Income Tax Payable                                                        75,000

Interest Payable                                                           3,000

Salaries Payable                                                      20,000

Notes Payable                                                         120,000

Common Stock ($10 par value)                                      100,000

Paid in Capital in Excess of Par                                      900,000

Retained Earnings                                                   380,000

Total                                                $1,744,000              $1,744,000

1/5 Paid the salaries due from the previous year.

1/30 The beginning inventory of 2016 consists of 10,000 baseball cards at a cost of $60 each. TimmyL sold 5,000 of these cards, on account, at a price of $200 each. TimmyL uses a perpetual inventory system and uses FIFO as a cost flow assumption.

2/1 Paid our suppliers the entire amount owed on the trade accounts payable from the previous year.

2/15 Collected $900,000 in accounts receivable from customers.

3/1 Paid shareholders the dividend declared in 2015.

3/31 Paid the Notes Payable plus all accrued interest. The Notes Payable account consists of a $120,000, 10 percent, 6 month obligation from the bank on 10/1/15.

4/1 Incurred and paid the utilities bill of $10,000.

4/15 Paid the government the taxes due from 2015.

5/1 Purchased on account 3,000 new baseball cards at a cost of $70 each.

5/15 Paid $200,000 of the amount owed on trade accounts payable.

6/1 Purchased $15,000 in supplies for cash and debited a permanent (real) account [instead of a temporary (nominal) account].

6/15 One customer owing $10,000 was declared bankrupt. TimmyL wrote off this account as uncollectable.

7/1 Purchased online advertising for one year at a cost of $2,000 per month for cash and debited a temporary (nominal) account [instead of a real (permanent) account].

7/5 Sold 5,000 new shares of common stock at a market price of $150 per share.

8/1 Lent the CEO of TimmyL $200,000 and accepted an eight month, eight percent note receivable.

8/15 Paid $50,000 salaries.

8/31 Sold 5,000 baseball cards on account at a price of $250 per card.

9/1 Purchased a computer system for $70,000 by making a $10,000 down payment and issuing a six month six per cent note for the balance.

9/15 Sold a quarter of the land owned by TimmyL for a cash price of $300,000.

10/1 Received $1,200,000 due from customers.

11/1 Received $100,000 in advance from a customer for the future sale of an extra special baseball card that TimmyL will acquire in 2017. TimmyL credited a permanent (real) account [instead of a temporary (nominal) account].

12/15 Declared an annual cash dividend of $5 per common share to shareholders payable in ninety days.

Accounting Cycle : Prepare an unadjusted trial balance at fiscal year end 2016.

Answer 1

Trial Balance	After Adjustment
Account	Debit	Credit
Cash	2,393,000
Accounts Receivable	140,000
Allowance for Bad Debts	-	8,000
Inventory	840,000
Supplies	25,000
Prepaid Advertising	21,000
Advertising	12,000
Land	150,000
Building	500,000
Accumulated Depreciation-B.		8,000
Patent	95,000
Accounts Payable		10,000
Dividends Payable		75,000
Income Tax Payable	-
Interest Payable		1,500
Salaries Payable	-
Notes Payable		60,000
Common Stock ($10 par value)		150,000
Paid in Capital in Excess of Par		1,600,000
Retained Earnings		380,000
Cost of Good Sold	300,000
Utilities	10,000
Interest Income Receivable	6,667
Interest Income		6,667
Bad Debts	10,000
Notes Receivable	200,000
Salaries	50,000
Computers	70,000
Interest Expenses	1,500
Advance from Customers		100,000
Gain on sale of Land		250,000
Dividends	75,000
Sales		2,250,000
	4,899,167	4,899,167

Working Before Adjustment After Adjustment Account       Debit      Credit       1.00           2.00         3.00         4.00       5.00         6.00       7.00       8.00        9.00       10.00     11.00     12.00     13.00      14.00       15.00     16.00         17.00     18.00      19.00          20.00      21.00    22.00   Debit      Credit Cash       250,000 (20,000) (100,000)    900,000 (30,000) (123,000) (10,000) (75,000) (200,000) (15,000) (24,000) 750,000 (200,000) (50,000) (10,000) 300,000    1,200,000 100,000 2,393,000 Accounts Receivable       80,000 1,000,000 (900,000) (10,000) 1,250,000 (1,200,000)     140,000 Allowance for Bad Debts         8,000              -           8,000 Inventory       600,000    (300,000) 210,000     840,000 Supplies       10,000    15,000       25,000 Prepaid Advertising           9,000    12,000       21,000 Advertising      12,000       12,000 Land         200,000 (50,000)     150,000 Building         500,000     500,000 Accumulated Depreciation-B.         8,000         8,000 Patent           95,000       95,000 Accounts Payable           100,000 (100,000) 210,000 (200,000)       10,000 Dividends Payable         30,000 (30,000) 75,000       75,000 Income Tax Payable                75,000 (75,000)              -   Interest Payable            3,000      (3,000)     1,500         1,500 Salaries Payable           20,000 (20,000)              -   Notes Payable             120,000 (120,000)    60,000       60,000 Common Stock ($10 par value)     100,000    50,000     150,000 Paid in Capital in Excess of Par             900,000 700,000 1,600,000 Retained Earnings          380,000     380,000 Cost of Good Sold     300,000     300,000 Utilities    10,000       10,000 Interest Income Receivable       6,667         6,667 Interest Income       6,667         6,667 Bad Debts    10,000       10,000 Notes Receivable       200,000     200,000 Salaries    50,000       50,000 Computers    70,000       70,000 Interest Expenses     1,500         1,500 Advance from Customers 100,000     100,000 Gain on sale of Land 250,000     250,000 Dividends 75,000       75,000 Sales 1,000,000 1,250,000 2,250,000 1,744,000 1,744,000 4,899,167 4,899,167