Background: Students entering Accounting 301 at SFSU come from diverse experiences in Principles of Accounting. This Practice Set is meant as a review of the accounting cycle, the basis of your Principles of Financial Accounting class taken as a prerequisite to this course. ALL of the material below should have been learned in that entry level course before you engage in Intermediate Accounting topics (if not, then you need to study up on that material). Complete all the required entries, ratio analyses and financial statements below and be prepared to discuss your answers in class when we begin Chapter 3 on the second day of classes.

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:

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.

Salaries incurred but not paid, $75,000.

Supplies on hand, $5,000.

Adjusted the prepaid advertising account to reflect the appropriate expense for 2016 and the ongoing asset balance.

The Buildings account reflects a $100,000 salvage (residual) value and a fifty year economic life. (Assume straight-line depreciation and amortization for all long-term assets)

The computer system has a $5,000 salvage value and a five year economic life.

A patent was purchased on 1/1/15 for $100,000 with no salvage value and a twenty year legal life.

One percent of sales is deemed uncollectable. TimmyL measures bad debts using the percent of sales method.

Accrued income taxes is $95,000.

Recorded the necessary accrued interest from the note receivable and the note payable.

1. Prepare all necessary closing entries and a post-closing trial balance for December 31, 2016.

2. Prepare Financial Statements in good form for the result of operations in 2016: (A) Income Statement, (B) Statement of Retained Earnings/Statement of Changes in Stockholders Equity, and (C) Classified Balance Sheet.

TimmyL Baseball Card Co Trial Balance December 31, 2015 Account Cash Accounts Receivable Allowance for Bad Debts Inventory Supplies Prepaid Advertising Debit Credit $250,000 80,000 S 8,000 600,000 10,000 9,000 200,000 500,000 and Building Accumulated Depreciation-B 8,000 Patent 95,000 Accounts Payable Dividends Payable Income Tax Payable Interest Payable Salaries Payable Notes Payable Common Stock (S10 par value) 100,000 30,000 75,000 3,000 20,000 120,000 100,000 900,000 380,000 $1,744.000 Paid in Capital in Excess of Par Retained Earnings Total $1,744.000