Mini Project: World Series Inc.

World Series Inc. sells inventory and provides services $($baseball lessons$).$ The following balance sheet is for World Series Inc. for the fiscal year $2019$ ending at $12/31/19$:

World Series Inc.

Balance Sheet

At $12/31/19$

ASSETS

Cash $200$

Accounts Receivable $100$

Inventory $300$

Total current assets $600$

Baseball Equipment, gross $600$

Less Accumulated Depreciation $-200$

Baseball Equipment, net $400$

Total Assets $1,000$

LIABILITIES & STOCKHOLDERS$$ EQUITY

Accounts Payable $85$

Interest Payable $15$

Bonds Payable $300$

Total Liabilities $400$

Common Stock $400$

Retained Earnings $200$

Total Stockholders$$ Equity $600$

Total Liabilities and Stockholders$$ Equity $1,000$

The following transactions occurred after the $12/31/19$ year$-$end.

$1.$ On $1/1/20,$ World Series Inc. issued common stock for $$250.$

$2.$ On $1/1/20,$ World Series Inc. paid $$10$ in advance to cover office rent for the period $1/1/20-12/31/20.$

$3.$ On $2/15/20,$ World Series Inc. purchased $$600$ of inventory $(60\%$ of the purchase was paid in cash$).$

$4.$ On $7/1/20,$ World Series Inc. sold inventory for $$500($the cost of the inventory sold is $$250)$; all the sales were on credit. Below, please record separately the sales revenue and the cost of inventory expense that is associated with this transaction $($in respective tables$).$

$5.$ On $8/1/20,$ the Astros signed up for batting lessons; the monthly fee for lessons is $$400.$ World Series Inc. received $$2,400$ in cash $($in advance from the Astros$)$ for these lessons.

$6.$ On $8/1/20,$ World Series Inc. paid $$36$ of interest on the bonds and bought back $$100$ of the bonds with no resulting gain or loss on this repurchase. Note that Bonds Payable and Interest Payable are listed in the Balance Sheet.

$7.$ On $12/31/20,$ the following transactions should be recorded before preparing the annual financial statements:

$7$A$.$ Annual interest rate on the bonds is $12\%.$ In Transaction$/$Issue #$6,$ on August $1$st$,$ World Series Inc. recognized some interest expense and changed the value of the outstanding bonds. Make sure the annual interest expense matches the bonds outstanding during the year, otherwise make an adjustment.

$7$B$.$ The manager of World Series Inc. earned an annual salary of $$80$ but has not yet been paid.

$7$C$.$ $$100$ of depreciation on the baseball equipment needs to be recorded.

$7$D$.$ World Series Inc. provided batting lessons to the Dodgers during November $2020.$ A bill for $$500$ was sent but the payment has not arrived yet.

$7$E$.$ World Series Inc. declared $$50$ cash dividends on $12/31/20$ to be paid in cash on $1/10/21.$

$7$F$.$ World Series Inc. used the office space during the year $($from transaction $2.).$

$7$G$.$ World Series Inc. provided $5$ months of services $($batting lessons$)$ to the Astros before the year$-$end $($from transaction $5.).$

Transaction Template

Balance Sheet Income Statement

Transaction Cash Asset $+$ Noncash Assets $=$ Liabil$-$

ities $+$ Contrib. Capital $+$ Earned

Capital Rev$-$enues $$ Expen

$-$ses $=$ Net

Income

$1.+=++=$

$2.+=++=$

$3.+=++=$

$4-$REV $+=++=$

$4-$COGS $+=++=$

$5.+=++=$

$6-$INT $+=++=$

$6-$REPUR $+=++=$

$7$A$.+=++=$

$7$B$.+=++=$

$7$C$.+=++=$

$7$D$.+=++=$

$7$E$.+=++=$

$7$F$.+=++=$

$7$G$.+=++=$