OLSON SPORTS, INC. Adjusted Trial Balance December 31, 2020 (prepared by Becky Olson) ($ in thousands) Cash Debit Credit $ 578 Accounts receivable 381 Allowance for doubtful accounts 34 Inventories 547 ok Prepaid expenses 67 Land 30 ht Building 197 Equipment (furniture, fixtures, and computers) 368 Accumulated depreciation 230 Software 114 Patents 5 Goodwill 169 Accounts payable 260 Accrued liabilities 190 Income taxes payable Long-term debt Common stock Additional paid-in capital. Retained earnings Sales revenue Credit card discounts Cost of sales Advertising expense Utilities expense Wages expense Interest expense Totals 24 57 11 251 1,115 2,543 61 1,314 153 93 633 5 $ 4,715 $ 4,715 a. On the last day of the year, failed to record the $500 sale of hiking merchandise to a customer who paid with his Visa credit card. Visa charges Olson Sports a 3 percent fee. b. On December 31, failed to write off a $3 bad debt. c. Failed to record bad debt expense for the year. After the write-off in (b), based on an aging of the accounts receivable, Olson Sports calculated that $45 will likely be uncollectible. d. The auditor noted that the inventory is listed on the trial balance at current cost using the first-in, first-out method. However, it should be measured using the last-in, first-out method. Beginning inventory was 35 units at $10 per unit, the April 10 purchase was 60 units at $11 per unit, the July 2 purchase was 72 units at $13 per unit, and the October 4 purchase was 48 units at $16 per unit. The count of inventory on hand at the end of the year was 59 units. e. Failed to record $18 in new store fixtures (equipment) that arrived at Olson Sports's shipping dock during the last week of the year, with payment due to the manufacturer within 30 days. Olson Sports paid $1 cash for delivery and $3 to install the new fixtures. f. On December 31, failed to record the sale of old computers (equipment) with a cost of $36 and a net book value of $12 for $3 cash. When they were sold, no depreciation had been recorded for the year. Olson Sports depreciates computer equipment using the straight-line method with a residual value of $4 over a four-year useful life. [Hint: Prepare two entries.) g. Failed to amortize the accounting software that Olson Sports purchased at the beginning of the year. It is estimated to have a three- year useful life with no residual value. The company does not use a contra-account. h. Failed to record the annual depreciation for the building and furniture (equipment): The building is depreciated using the straight-line method with a residual value of $17 over a 20-year useful life. Furniture costing $127 is depreciated using the double-declining-balance method with a residual value of $28 over a 10-year useful life. The accumulated depreciation of the furniture at the beginning of the year was $67. 1. Failed to record income tax expense for the year. Including the effects of the above entries, record Olson Sports's income tax expense at an effective rate of 24 percent. Journal entry worksheet < 1 3 4 5 6 7 8 9 10 Record the $500 sale of hiking merchandise to a customer along with a 3% fee charged by Visa for credit card payment. Note: Enter debits before credits. Transaction Dec 31 Cash General Journal Credit card discount Sales revenue 4 Debit Credit 15 500 Record entry Clear entry View general journal Journal entry worksheet < 2 3 4 5 6 7 8 9 10 Record the write off a $3 bad debt. Note: Enter debits before credits. Transaction General Journal Debit Credit Dec 31 Allowance for doubtful accounts 3 Accounts receivable 3 Record entry Clear entry View general journal Book Print Journal entry worksheet 3 5 6 7 8 Record bad debt expense for the year based on an aging of the accounts receivable. Note: Enter debits before credits. 6 10 > Transaction General Journal Debit Credit Dec 31 Bad debt expense 14 Allowance for doubtful accounts 14 Record entry Clear entry View general journal ok ht 6 Journal entry worksheet 2 3 5 6 7 8 Record the cost of sales resulting from a change in the method of valuing current cost of inventory from FIFO to LIFO. Note: Enter debits before credits. 10 > Transaction General Journal Debit Credit Dec 31 Inventories Cost of sales Record entry Clear entry View general journal Journal entry worksheet 1 2 3 LO 5 6 7 8 9 10 Record the purchase of $18 in new store fixtures (equipment), $1 paid for its delivery and $3 for its installation. Note: Enter debits before credits. Transaction Dec 31 General Journal Debit Credit Record entry Clear entry View general journal View transaction list ok Journal entry worksheet it < 1 4 5 7 8 9 10 Record the depreciation on sale of old computers (equipment) with a cost of $36 and a net book value of $12 for $3 cash. Note: Enter debits before credits. Transaction Dec 31 General Journal Debit Credit Record entry Clear entry View general journal Journal entry worksheet 1 2 3 4 56 ^ Record the loss on sale of old computers (equipment) sold for $3 cash. Note: Enter debits before credits. Transaction Dec 31 10 General Journal Debit Credit Record entry Clear entry View general journal bok Journal entry worksheet nt 3 5 6 7 Record the amortization of accounting software. Note: Enter debits before credits. Transaction Dec 31 CO 0 9 10 General Journal Debit Credit Record entry Clear entry View general journal ok nt Journal entry worksheet 3 5 6 7 Record the annual depreciation for the building and furniture. Note: Enter debits before credits. Transaction Dec 31 6 10 General Journal Debit Credit Record entry Clear entry View general journal Proy Journal entry worksheet 1 3 5 6 7 8 Record the income Tax expense for the year. Note: Enter debits before credits. O 10 10 Transaction General Journal Debit Credit Dec 31 Income tax expense Income taxes payable Record entry Clear entry View general journal Cash Income Statement For the Year Ended December 31, 2020 (in thousands) Gross profit Operating expenses: Total operating expenses Other item: 578 578 578 578 OLSON SPORTS, INC. Statement of Stockholders' Equity For the Year Ended December 31, 2020 Dates: Dec 31 to: Dec 31 (in thousands) Common Additional Stock Paid-in Capital Retained Earnings Total Stockholders' Equity $ 0 0 $ 0 $ 0 $ 0 $ 0 Balance Sheet > Balance, January 1, 2020 Balance, December 31, 2020 4 Book rint Assets Current assets: OLSON SPORTS, INC. Balance Sheet December 31, 2020 (in thousands) Dates: Total current assets Property, plant, and equipment: 0 Property, plant, and equipment, net 0 Property, plant, and equipment, net Total assets Liabilities and Stockholders' Equity Current liabilities: $ Total current liabilities 0 Total liabilities Stockholders' equity: 0 Total stockholders' equity 0