Bobs Baseball Bats (BBB) is a fictional company. The following information includes the balance sheet as of December 31, 2017, and the details of the transactions that occurred during 2018. Background: Bobs Baseball Bats is a baseball bat retailer (in other words, BBB buys bats from a bat manufacturer in Louisville, Kentucky and then sells them in their stores). Transactions for 2018 are representative of such a companys business activities. HINT: Read through the entire assignment at least twice before beginning to do any work. This will help you familiarize yourself with all of the important facts.

Transactions for 2018:

1. Sales and Accounts Receivable

a. BBBs bats during 2018 had a sales price of $65 per bat. All sales were made on account.

b. Cash collections on account amounted to $165,000.

c. On July 1, 2018, BBB identified $10,000 of receivables as being uncollectible and wrote them off.

d. BBB follows a percentage-of-receivables approach to estimate their accounts receivable that will become uncollectible. As of the end of 2017, BBB estimates that 15% of their receivables will be uncollectible.

2. Inventory a. BBB began 2018 with 1,000 bats which had a cost of $20 each. Employees physically counted 800 bats remaining in the warehouse at the end of 2018. BBB uses a periodic LIFO inventory system to cost their inventory. The following purchases (all on account) were made during 2018:

i. January 15th 750 bats @ $22.00 each

ii. March 22nd 1,000 bats @ $25.00 each

iii. August 5th 1,250 bats @ $28.00 each

iv. October 26th 1,500 bats @ $30.00 each

b. During 2018, BBB made cash payments to inventory suppliers on the following dates:

i. January 29th $13,200

ii. April 16th $30,000

iii. October 2nd $35,000

iv. November 30th $27,000

3. Property, Plant and Equipment

a. BBB uses straight-line depreciation for all of its store fixtures and office equipment.

b. Below is a schedule of the store fixtures and office equipment BBB had in place at the end of 2017. FIXTURES AND EQUIPMENT (as of December 31, 2017) ID # Historical Cost Estimated Useful Life Estimated Salvage Value Date acquired 1256 $24,000 10 years $0 Jan. 1, 2012 1876 $15,000 8 years $3,000 Jan. 1, 2015 4299 $31,000 6 years $7,000 Jan. 1, 2016

c. On January 1, 2018 new store fixtures were purchased for $16,000 in cash. BBB expects the fixtures to have a 10 year useful life and a $4,000 salvage value.

d. On April 1, 2018 office equipment (ID#1876) was sold for $8,000.

4. Debt

a. On November 1, 2018, BBB paid-off the note payable that was outstanding at the beginning of the period. The note had a 12% interest rate, had been issued on November 1, 2017, and required semiannual interest payments on April 30, 2018 and October 31, 2018.

b. On December 1, 2018, BBB borrowed $45,000 on a new note payable. The new note carries an 8% interest rate with semiannual interest payments required on May 31, 2019 and November 30, 2019.

5. Operations

a. BBB made a rent payment of $36,000 on August 1, 2018. The payment was for rent on the store building and was prepaid for one year. The balance in the prepaid account at the end of 2017 represents the rent for January through July 31, 2018 that was paid for on August 1, 2017.

b. Cash paid out during 2018 for wages totaled $27,000. Records indicate that salaries for the last week of December 2018 amounted to $1,500 and would be paid at the end of the first week in January 2019 (a two-week pay period).

c. Other expenses (paid in cash) totaled $7,500.

6. Income Taxes a. On March 15, 2018, BBB paid their 2017 income taxes. BBB will pay their 2018 income taxes on March 15, 2019. BBB has a 30% income tax rate for both 2017 and 2018.

7. Common Stock

a. On December 1, 2018, dividends of $5,000 were declared and paid.

b. On January 1, 2018, BBB issued 10,000 additional shares of common stock for $4 per share.

Required:

1. Using the journal and T-accounts provided, record the transactions that occurred during 2018. If no specific date is provided for a transaction, leave the date column blank. IMPORTANT: Since there are several transactions for which no date is given, the journal entries do NOT need to be in chronological order. All adjusting and closing entries should have December 31, 2018 as the date.

2. Prepare the balance sheet, statement of retained earnings and income statement for Bobs Baseball Bats, Inc. for the year ended December 31, 2018. 3. Record the closing entries for the company (this step is often skipped, dont lose these points).

Check Figures: Income Taxes Expense: $21,608 Total Current Liabilities: $87,708 Total Current Assets: $211,775 Assets Cash $ 35,000 Accounts Receivable 45,000 Less: Allowance for Doubtful Accounts (6,750) Net Accounts Receivable 38,250 Prepaid Rent 17,500 Inventory 20,000 Total Current Assets $ 110,750 Property, Plant, and Equipment 70,000 Less: Accumulated Depreciation (20,500) Net Property, Plant, and Equipment 49,500 Total Assets $ 160,250 Liabilities and Owners Equity Accounts Payable $ 3,000 Wages Payable 2,000 Interest Payable 1,200 Income Taxes Payable 3,500 Notes Payable 60,000 Total Current Liabilities $ 69,700 Common Stock (15,000 shares outstanding, $1 par) 15,000 Additional Paid In Capital 20,000 Retained Earnings 55,550 Total Liabilities and Owners Equity