any help would he appreciated
Required 1. Using the information presented in Exhibit 1, prepare the appropriate accounting journal entries. Note that for a specific event that recurs several times during the year, one journal entry for its total amount that year should be made. 2. From the work performed in question 1, prepare a balance sheet and income statement for CUCTC as of the end of its first year of operations. 3. What additional information does Norris need to ask Hopkins about and why before declaring the financial statements, prepared in question two above, final? Exhibit 1 Colorado & Utah Canyons Tour Company Panel A: Summary of current year business events from the CUCTC checkbook register 1. Ron Hopkins established CUCTC and purchased 1,000 shares of its stock, buying all 1,000 shares for $60,000, thus becoming the founder and sole owner of the company. 2. At the beginning of the year, Hopkins purchased, with $22,000 cash, quality cross-country skis, ropes, snowshoes, and backpacks, all of which would be used on the various tours for at least a couple of years. 3. On January 2, Hopkins paid $9,000 for 18 months of business liability insurance. 4. Hopkins paid $2,000 to a local law firm for setting up the company. 5. Hopkins acquired eight used snowmobiles, paying $20,000 cash and signing a $30,000 note dated February 1 that was payable to the High Mesa Equipment Company. The note's principal was due in full on its four- year anniversary date. It carried an annual interest rate of 4%, and interest was owed at the end of each month. High Mesa had insisted on a direct bank account withdrawal arrangement with CUCTC. 6. Recurring payments to subcontracted tour guides and helpers totaled $52,000 for the year. 7. The check register showed a total of $165,600 collected from customers for various tours. All tours were prepaid in full at the time of reservation. As of December 31, Norris ascertained that $3,600 of the $165,600 was for trips scheduled early in the new year. 8. At the end of every month, there had been a $3,000 check disbursed to Hopkins with "salary" as the notation.' 9. At the beginning of every month, there had been a $1,500 check issued for the rental of the barn from which CUCTC operated. 10. There were checks made out to Ute Recreational Equipment Inc. for ATV rentals several times during the year. For the year, those checks totaled $19,800. 11. Expenditures for fuel, food, and miscellaneous supplies used on the tours totaled $8,000 for the year. 12. Cash expenditures for retail provisions stocked in the barn's front showroom and available for sale to tour customers and others who walked in totaled $14,700. 13. There had been a $10,000 April check made payable to Todd's Mountain Bikes. The reference line in the register noted, "one-quarter partnership interest." 14. Hopkins had paid $1,600 twice for an ad in a regional quarterly outdoor adventure magazine. The first check was dated June 1. The second check was dated December 1 and was for the magazine's December issue. 15. Retail merchandise sales made and collected totaled $23,000. Exhibit 1 (continued) Panel B: Additional information from Hopkins's box of notes, letters, and e-mails 16. In a December e-mail exchange with one of CUCTC's main suppliers of miscellaneous retail provisions available for purchase by tour customers (e.g., waterproof disposable cameras, T-shirts, canyon maps, and framed photos), Norris noted that the supplier had begun granting 30-day credit terms to CUCTC. The e- mail string had confirmed receipt of $1,200 worth of supplies by CUCTC on December 20, and the check register had shown no related payment by year-end. 17. There was a ribboned certificate, dated November 30, declaring CUCTC as one of the region's most promising outdoor-based start-up companies of the year. It was from the Western Colorado Environmental Alliance. In Hopkins's handwriting and next to a smiley face, Norris saw a note, "Yeah, me. My stock just got more valuable." 18. November must have been a slow month for CUCTC. Norris found a handwritten note that Hopkins had made: Took five college buddies on a four-day tour...no other business that week...we had a blast...no life-threatening injuries. They will pay $1,000 each in the new year after they receive their year-end bonuses. 19. There was a letter from a Missouri law firm notifying Hopkins that a customer was suing CUCTC for medical bills and negligence related to a biking accident on one of the summer tours. The suit was seeking $250,000. Norris had asked Hopkins about this: Oh, that was a crazy guy who ignored our instructions and cautions when we had to navigate through a boulder field in Diablo Canyon. He took a spill and broke his arm. He was a pain in the 20. There was one more letter in the box. This one was from Ute Recreational Equipment Inc. informing Hopkins that he could purchase five of the ATVs he had frequently used for $5,000 each. Hopkins had noted in the margin under a "To Do" header, "Sounds appealing, send letter of intent to accept the offer." No such letter had been sent by the end of the year. 21. Norris had requested that on December 31, Hopkins take a tally of the retail merchandise on hand and available for sale to customers and the general public. Norris retrieved the e-mail Hopkins had sent him indicating that $900 of retail provisions were on hand on December 31
