PROJECT 1 ACCT 3303 Spring 2013 Background Information The 2011 balance sheet of the Blackberry Mountain Inc. is provided below: BLACKBERRY MOUNTAIN INC. BALANCE SHEET DECEMBER 31, 2011 Current Assets Cash 52,485 Shortterm Investments 51,030 Accounts Receivable 165,824 Less: Allowance for Doubtful Accounts (1,850) Prepaid expenses 16,252 Inventories 489,713 Total Current Assets 773,454 NonCurrent Assets Longterm Investments Investments in heldformaturity securities 82,000 Land held for future development 5,500 Property, Plant, and Equipment Land 125,000 Buildings 975,800 Less: Accumulated Depreciation (341,200) Intangible Assets Capitalized Development Costs 6,000 Goodwill 66,000 Other Identifiable Intangible Assets 28,000 Total NonCurrent Assets 947,100 Total Assets 1,720,554 Current Liabilities Deposit Received from Customers 4,380 Provisions Related to Warranties 12,500 Salary and Wages Payable 5,560 Interest Payable 20,500 Accounts Payable 197,532 Notes Payable 80,000 Total Current Liabilities 320,472 NonCurrent Liabilities Provisions Related to Pensions 75,000 Bonds Payable 425,000 Total NonCurrent Liabilities 500,000 Total Liabilities 820,472 Stockholders' Equity Common Stock 400,000 Preferred Stock 300,000 Paidincapital Common Stock 27,500 Paidincapital Preferred Stock 10,000 Retained Earnings 170,482 Accumulated Other Comprehensive Income 4,850 Less: Treasury Stock (12,750) Total Stockholders' Equity 900,082 Total Liabilities and Stockholders' Equity 1,720,554 Transactions for Blackberry Mountain Inc for the month of January is as follows: 1 Owners invest $21,000 of additional cash in the business 2a Supplies are purchased for $3,000. 2b Insurance is paid for 6 months beginning January 1: $5,400 (record as an asset) 2c Rent is paid for 3 months beginning in January: $4,500 (record as an asset) 2d Three employees are hired. Each employee will be paid $2,800 per month. 3 FFD borrows $45,000 from 1st State Bank at 12% annual interest. 6 A delivery van is purchased for $22,500 cash. It will be used for 3 years and will be depreciated monthly using straight-line depreciation with no salvage value. A full month of depreciation will be charged in January. 7 All of the receivables from Decembers sales are collected. 8 All of the accounts payable from December are paid. 9 Services are performed for customers on account. Invoices totaling $9,800 are mailed. 10 Services are performed for cash customers: $7,600. 15 FFD borrows $16,000 from 2nd State Bank at 9% annual interest. 16 Wages for the first half of the month are paid on January 16: $4,200 20 The company receives $3,000 from a customer for an advance order for services to be provided in January and February. 25 Collections from customers on account (see January 9 transaction): $4,500. 30 A $3,100 utility bill for January arrived. It is due on February 15. Additional information for the adjusting entries at January 31: a. The company completed 60% of the deliveries for the customer that paid in advance on January 20th. b. Interest is accrued for the two bank loans (assume a full month for the 1st State Bank loan and month for the 2nd State Bank loan). c. The last 2 weeks wages earned by employees are $1,400 per employee and will be paid on February 3rd. d. Record January depreciation. e. Adjust the prepaid asset accounts as needed. Instructions: 1. Prepare journal entries for each event. 2. Prepare the t-accounts 3. Prepare the Unadjusted Trial Balance 4. Prepare Adjusting Entries. 5. Prepare adjusted trial balance. 6. Prepare Income Statement, Balance sheet, and Statement of Retained Earnings. 7. Prepare closing Entries.