Record adjustments and prepare financial statements. (LO 1, 2, 3, 4). The accounting records for Sony Snowboard Company, a snowboard repair company, contained the following balances as of December 31, 2008:

Sony Snowboard Company Balance Sheet At December 31, 2008

Assets Cash........................................... $40,000

Accounts receivable ................ 16,500 Land........................................... 20,000 Totals ......................................... $76,500

Liabilities and Shareholders equity

Accounts payable ............................ Common stock ................................. Retained earnings............................

$17,000 45,000 14,500

$76,500

CHAPTER 3 ACCRUALS AND DEFERRALS: TIMING IS EVERYTHING IN ACCOUNTING 125The following accounting events apply to Sonys 2009 fiscal year:

a. January 1 The company received an additional $20,000 cash from the owners in exchange for common stock.

b. January 1 Sony purchased a computer that cost $15,000 for cash. The computer had no salvage value and a three-year useful life.

c. March 1 The company borrowed $10,000 by issuing a one-year note at 12%.

d. May 1 The company paid $2,400 cash in advance for a one-year lease for office space.

e. June 1 The company declared and paid dividends to the owners of $4,000 cash.

f. July 1 The company purchased land that cost $17,000 cash.

g. August 1 Cash payments on accounts payable amounted to $6,000.

h. August 1 Sony received $9,600 cash in advance for 12 months of service to be performed monthly for the next year, beginning on receipt of payment.

i. September 1 Sony sold a parcel of land for $13,000 cash, the amount the company originally paid for it.

j. October 1 Sony purchased $795 of supplies on account.

k. November 1 Sony purchased short-term investments for $18,000 cash. The invest- ments pay a fixed rate of 6%.

l. December 31 The company earned service revenue on account during the year that amounted to $40,000.

m. December 31 Cash collections from accounts receivable amounted to $44,000.

n. December 31 The company incurred other operating expenses on account during the year of $5,450.

Salariesthathadbeenearnedbythesalesstaffbuthadnotyetbeenpaidamountedto$2,300. Suppliesworth$180wereonhandattheendoftheperiod.

Requirements

1. PrepareanaccountingequationworksheetandrecordtheaccountbalancesasofDecember31,2008(beginningbalances).

2. Using the worksheet, record the transactions that occurred during 2009 and the necessary adjustments needed at year end. (Based on the given transaction data, there are five additional adjustments [for a total of seven] that need to be made before

   the financial statements can be prepared.)

3. Preparetheincomestatement,statementofchangesinshareholdersequity,andstatementofcashflowsfortheyearended

   December 31, 2009, and the balance sheet at December 31, 2009.

Requirement 2. Using the worksheet, record the transactions that occurred during 2009 and the necessary adjustments needed at year end. (Based on the given transaction data, there are five additional adjustments for a total of seven] that need to be made before the financial statements can be prepared.) Enter the transactions and adjustments into the accounting equation. Begin with transaction a. (Use parentheses or a minus sign when entering account decreases. Round your answers to the nearest whole number. Use only the necessary input lines.) Shareholders' Equity Contributed Capital Retained Earnings Assets Liabilities + Account Account Account Account + + = = + C + d. e - = f. - + = - - j. - = I. - - - n. Adj. 1 - + Adj. 2 - Adj. 3 - + + + + + ++ + + + + Adj. 3 Adj. 4 Adj. 5 + + Adj. 6 + + Adj. 7 + End bal Requirement Prepare the income statement, statement of changes in shareholders' equity, and statement of cash flows for the year ended December 31, 2009, and the balance sheet at December 31, 2009. Prepare the income statement for the year ended December 31, 2009. Begin by selecting the heading. Then complete the income statement. (Leave unused cells blank.)