Question

Record adjustments and prepare financial statements. (LO 1, 2, 3, 4). The accounting records for Sony Snowboard Company, a snowboard repair company, contained the following balances as of December 31, 2008:

Sony Snowboard Company Balance Sheet
At December 31, 2008

Assets Cash........................................... $40,000

Accounts receivable ................ 16,500 Land........................................... 20,000 Totals ......................................... $76,500

Liabilities and Shareholders’ equity

Accounts payable ............................ Common stock ................................. Retained earnings............................

$17,000 45,000 14,500

$76,500

CHAPTER 3 • ACCRUALS AND DEFERRALS: TIMING IS EVERYTHING IN ACCOUNTING 125The following accounting events apply to Sony’s 2009 fiscal year:

a. January 1 The company received an additional $20,000 cash from the owners in exchange for common stock.

b. January 1 Sony purchased a computer that cost $15,000 for cash. The computer had no salvage value and a three-year useful life.

c. March 1 The company borrowed $10,000 by issuing a one-year note at 12%.

d. May 1 The company paid $2,400 cash in advance for a one-year lease for office space.

e. June 1 The company declared and paid dividends to the owners of $4,000 cash.

f. July 1 The company purchased land that cost $17,000 cash.

g. August 1 Cash payments on accounts payable amounted to $6,000.

h. August 1 Sony received $9,600 cash in advance for 12 months of service to be performed monthly for the next year, beginning on receipt of payment.

i. September 1 Sony sold a parcel of land for $13,000 cash, the amount the company originally paid for it.

j. October 1 Sony purchased $795 of supplies on account.

k. November 1 Sony purchased short-term investments for $18,000 cash. The invest- ments pay a fixed rate of 6%.

l. December 31 The company earned service revenue on account during the year that amounted to $40,000.

m. December 31 Cash collections from accounts receivable amounted to $44,000.

n. December 31 The company incurred other operating expenses on account during the year of $5,450.

• Salariesthathadbeenearnedbythesalesstaffbuthadnotyetbeenpaidamountedto$2,300. • Suppliesworth$180wereonhandattheendoftheperiod.

Requirements

1. PrepareanaccountingequationworksheetandrecordtheaccountbalancesasofDecember31,2008(beginningbalances).

2. Using the worksheet, record the transactions that occurred during 2009 and the necessary adjustments needed at year end. (Based on the given transaction data, there are five additional adjustments [for a total of seven] that need to be made before

   the financial statements can be prepared.)

3. Preparetheincomestatement,statementofchangesinshareholders’equity,andstatementofcashflowsfortheyearended

   December 31, 2009, and the balance sheet at December 31, 2009.

The accounting records for Sony Snowboard Company, a snowboard repair company, contained the following balances as of December 31, 2008: EB(Click the icon to view the balance sheet at December 31, 2008.) The following accounting events apply to Sony's 2009 fiscal year: (Click the icon to view the accounting events.) Requirements Requirement 1. Record the account balances as of December 31, 2008 (beginning balances) the accounting equation worksheet. Enter the beginning balances into the accounting equation. Some of the account names will be abbreviated. (Use only the necessary input cells.) Shareholders' Equity Liabilities Retained Earnings Assets Contributed Capital + S S Account Account Account Account Beg, bal y adjustments needed year end. (Based on the given transaction data, there are five additional ariustments fo a total of sevenlthat need to be made hefore the ffnancial statements can be prenared prepared.) Enter the transactions and adjustments into the accounting equation. Begin with transaction number. Use only the necessary input lines.) (Use parentheses or a minus sign when entering account decreases. Round your answers the nearest whole

Answer 1

1.

							Shareholders Equity
	Assets		=	Liabilities		+	Contributed Capital		+	Retained Earnings
	$	Account		$	Account		$	Account		$	Account
Beg. Bal	$   40,000.00	Cash		$ 17,000.00	Accounts Payable		$ 45,000.00	Common Stock		$ 14,500.00	Retained Earnings
	$   16,500.00	Accounts Receivable
	$   20,000.00	Land
Total	$   76,500.00		=	$ 17,000.00		+	$ 45,000.00		+	$ 14,500.00

2.

							Shareholders Equity
	Assets		=	Liabilities		+	Contributed Capital		+	Retained Earnings
	$	Account		$	Account		$	Account		$	Account
Beg. Bal	$      40,000.00	Cash		$ 17,000.00	Accounts Payable		$ 45,000.00	Common Stock		$ 14,500.00	Retained Earnings
	$      16,500.00	Accounts Receivable
	$      20,000.00	Land
Jan-01	$      20,000.00	Cash					$ 20,000.00	Common Stock
Jan-01	$    -15,000.00	Cash
	$      15,000.00	Computer
Mar-01	$      10,000.00	Cash		$ 10,000.00	Note Payable
May-01	$      -2,400.00	Cash
	$        2,400.00	Advance Rent
Jun-01	$      -4,000.00	Cash								-4000	Dividend Paid
Jul-01	$    -17,000.00	Cash
	$      17,000.00	Land
Aug-01	$      -6,000.00	Cash		$ -6,000.00	Accounts Payable
Aug-01	$        9,600.00	Cash		$    9,600.00	Deferred Revenue
Sep-01	$      13,000.00	Cash
	$    -13,000.00	Land
Oct-01	$          -795.00	Cash
	$           795.00	Supplies
Nov-01	$    -18,000.00	Cash
	$      18,000.00	Short term Investment
Dec-31	$      40,000.00	Accounts Receivable								$ 40,000.00	Revenue
Dec-31	$      44,000.00	Cash
	$    -44,000.00	Accounts Receivable
Dec-31	$      -5,450.00	Cash								$ -5,450.00	Operating Expenses
Dec-31				$    2,300.00	Salaries Payable					$ -2,300.00	Salaries
	$          -615.00	Supplies								$     -615.00	Supplies Expense
	$      -5,000.00	Accumulated Depreciation								$ -5,000.00	Depreciation
	$      -1,600.00	Advance Rent								$ -1,600.00	Rent
				$    1,000.00	Interest Payable					$ -1,000.00	Interest
				$ -4,000.00	Deferred Revenue					$   4,000.00	Deferred Revenue
	$           180.00	Interest Receivable								$      180.00	Other Income
End Bal	$      67,955.00	Cash		$ 11,000.00	Accounts Payable		$ 65,000.00	Common Stock		$ 38,715.00	Retained Earnings
	$      12,500.00	Accounts Receivable		$    5,600.00	Deferred Revenue
	$      24,000.00	Land		$    2,300.00	Salaries Payable
	$      15,000.00	Computer		$    1,000.00	Interest Payable
	$      -5,000.00	Accumulated Depreciation		$ 10,000.00	Note Payable
	$      18,000.00	Short Term Investment
	$           180.00	Interest Receivable
	$           180.00	Supplies
	$           800.00	Advance Rent
Totals	$ 1,33,615.00		=	$ 29,900.00		+	$ 65,000.00		+	$ 38,715.00