No.

Date
(1)

Accounts
4/1/2012 Dr. Cash (+A)
Cr. Common Stock (+SE)
Cr. Additional Paid-in Capital (+SE)

Debits
Credits
250,000
25,000
225,000

(2)

4/1/2012 Park's loan of $50,000 not recorded by Pathfinder because it is

a loan to Park personally, not to the business

(3)

4/2/2012 Dr. Legal Fee Expense (+E, -SE)

Cr. Cash (-A)

(4)

(5)
(6)
(7)
(8)
(9)
(10)

4/7/2012 Dr. Building (+A)

Dr. Land (+A)
Cr. Mortgage Payable (+L)
Cr. Cash (-A)
5/25/2012 Dr. Building (+A)
Cr. Cash (-A)
6/2/2012 Dr. Metal Detectors (+A)
Cr. Cash (-A)

3,900
3,900
52,000
103,000
124,000
31,000
33,000
33,000
120,000

6/30/2012 Dr. Inventory (+A)

Cr. Accounts Payable (+L)

2,000

6/30/2012 Dr. Software (+A)

Cr. Cash (-A)

2100

6/30/2012 Dr. Prepaid Advertising (+A)

Cr. Cash (-A)

8,000

6/30/2012 Dr. Notes Receivable (+A)

Cr. Cash (-A)

5,000

2,000
2100
8,000
5,000

(11)

6/30/2012 No entry for employment contracts: work must be performed

or cash paid before entry is recorded

(12)

6/30/2012 Dr. Retained Earnings (-SE)

Cr. Dividends Payable (+L)

2,500

7/31/2012 Dr. Accounts Payable (-L)

Cr. Cash (-A)

2,000

8/31/2012 Dr. Dividends Payable (-L)

Cr. Cash (-A)

2,500

12/1/2012 Dr. Cash (+A)

Cr. Unearned Rental Revenue (+L)

1,200

(13)
(14)
(15)
(16)

(17)

12/31/2012 Dr. Cash (+A)

Dr. Accounts Receivable (+A)
Cr. Rental Revenue (+R, +SE)
12/31/2012 Dr. Inventory (+A)

(240 * 500)
120,000

(25,000 * 0.10)
2,500
2,000
2,500
1,200

120,100
4,200
124,300
40,000

Cr. Cash (-A)

Cr. Accounts Payable (+L)
(18)
(19)
(20)
(21)

38,000
2,000

12/31/2012 Dr. Cash (+A)

Cr. Sales (+R, +SE)

35,000

12/31/2012 Dr. Cost of Goods Sold (+E, -SE)

Cr. Inventory (-A)

30,000

12/31/2012 Dr. Salaries and Wages Expense (+E, -SE)

Cr. Cash (-A)

82,000

35,000
30,000
82,000

12/31/2012 Dr. Interest Expense (+E, -SE)

Cr. Interest Payable (+L)

4,900

(22)

12/31/2012 Dr. Bldg. Depreciation Expense (+E, -SE)

Cr. Accumulated Depreciation (+XA, -A)

1500 (52,000+33,000-10,000)/25 *1/2

1500

(23)

12/31/2012 Dr. Met Det Depreciation Expense (+E, -SE)

Cr. Accumulated Depreciation (+XA, -A)

(24)
(25)
(26)
(27)
(28)
(C1)

(C2)

12/31/2012 Dr. Software Amortization (+E, -SE)

Cr. Software (-A)

4,900

30,000

(120,000/2) * 1/2
30,000

350
350

12/31/2012 Dr. Advertising Expense (+E, -SE)

Cr. Prepaid Advertising (-A)

4,000

12/31/2012 Dr. Interest Receivable (+A)

Cr. Interest Revenue (+R, +SE)

250

12/31/2012 Dr. Unearned Rental Revenue (-L)

Cr. Rental Revenue (+R, +SE)

100

12/31/2012 Dr. Income Tax Expense (+E, -SE)

Cr. Income Taxes Payable (+L)

630

4,000
250
100
(1800*.35)
630

12/31/2012 Dr. Sales (-R, -SE)

Dr. Rental Revenue (-R, -SE)
Dr. Interest Revenue (-R, -SE)
Cr. Retained Earnings (+SE)

35,000
124,400
250

12/31/2012 Dr. Retained Earnings (-SE)

Cr. Cost of Goods Sold (-E, +SE)
Cr. Salaries and Wages Expense (-E, +SE)
Cr. Legal Fee Expense (-E, +SE)
Cr. Advertising Expense (-E, +SE)
Cr. Bldg. Depreciation Expense (-E, +SE)
Cr. Met Det Depreciation Expense (-E, +SE)
Cr. Software Amortization (-E, +SE)
Cr. Interest Expense (-E, +SE)
Cr. Income Tax Expense (-E, +SE)

157,280

159,650
30,000
82,000
3,900
4,000
1,500
30,000
350
4,900
630

(240 * 500)

(25,000 * 0.10)
31,800

33,000-10,000)/25 *1/2
(120,000/2) * 1/2

(1)
(15)
(16)
(18)

Cash (A)
250,000
3,900
1,200
31,000
120,100
33,000
35,000
120,000
2100
8,000
5,000
2,000
2,500
38,000
82,000

Land (A)
(3)

(4)

(4)
(5)
(8)
(9)

(4)

(10)

(5)

(13)

Buildings (A)
52,000
33,000
85,000

Income Taxes Payable (L)

630
630

(17)
(20)

(6)

Metal Detectors (A)

120,000

Accounts Receivable (A)

4,200

Unearned Rental Revenue (L)

100
1,200

Notes Receivable (A)

5,000

Mortgage Payable (L)

124,000

(22)

124,000
Common Stock (SE)
25,000

2,100

(13)

25,000

Accounts Payable (L)

2,000
2,000
2,000
2,000
Interest Payable (L)
4,900

(19)

(1)

(24)

1,750

Interest Receivable (A)

250

(4)

(23)

Software (A)
(8)

(15)

1,100

Acm. Depreciation (XA)

1,500
30,000
31,500

250

(17)

(27)

120,000

Inventory (A)
2,000
30,000
40,000
12,000

(28)

(14)

5,000

(7)

(12)

350

(26)

Dividends Payable (L)

2,500
2,500

103,000

4,200

(10)

(14)

(6)

78,800

(16)

103,000

Additional Paid-in-Capital (SE)

225,000

(7)

(1)

(17)

225,000

(21)

(12)
(C2)

4,900

Retained Earnings (SE)

2,500
159,650
157,280
130

(C1)

Prepaid Advertising (A)

8,000
4,000
(25)
4,000
Sales (R)
35,000

(18)

(3)

35,000
(C1)

Interest Revenue (R)

250

(C1)

(19)

(25)

4,000

(26)

(22)

Bldg. Depreciation Exp. (E)

1,500
1,500

1,500

(23)

(C2)

Met Det Depreciation Exp. (E)

30,000
30,000
30,000

(C2)

(C2)

Salary& Wages Exp. (E)

82,000

(24)

82,000

Software Amortization (E)

350
350
350

(C2)

630

(C2)

250

82,000

Income Tax Exp. (E)

630
630

4,000

Cost of Goods Sold (E)

30,000

(28)

(27)

30,000

(20)

(C2)

Advertising Exp. (E)

4,000

250

30,000

4,900

(C2)

(16)

Interest Expense (E)

4,900
4,900

3,900

Rental Revenue (R)

124,300
100
124,400
124,400
0

(21)

3,900

35,000
0

(C1)

Legal Fee Exp. (E)

3,900

(C2)

(C2)

Relic Spotter Inc.

Trial Balances
December 31, 2012

Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Inventory
Prepaid Advertising
Land
Buildings
Metal Detectors
Accumulated Depreciation
Software
Accounts Payable
Interest Payable
Dividends Payable
Income Taxes Payable
Unearned Rental Revenue
Mortgage Payable
Common Stock
Additional Paid-in-Capital
Retained Earnings
Rental Revenue
Sales
Interest Revenue

Unadjusted Balances
Debit
Credit
78,800
4,200
5,000
12,000
8,000
103,000
85,000
120,000
2,100
2,000
1,200
124,000
25,000
225,000

Adjustments
Debit
Credit

250
4,000

31,500
350

Adjusted Balances
Debit
Credit
78,800
4,200
5,000
250
12,000
4,000
103,000
85,000
120,000
31,500
1,750
2,000
4,900
630
1,100
124,000
25,000
225,000

4,900
630
100

2,500

Closing Entries
Debit
Credit

2,500
124,300
35,000
-

100
250

2,370
124,400
35,000
250

124,400
35,000
250

Cost of Goods Sold

Salaries and Wages Expense
Legal Fees Expense
Advertising Expense
Bldg. Depreciation Exp.
Met Det Depreciation Exp.
Software Amortization
Interest Expense
Income Tax Expense

30,000
82,000
3,900
536,500

536,500

4,000
1500
30,000
350
4,900
630
41,730

41,730

30,000
82,000
3,900
4,000
1,500
30,000
350
4,900
630
573,780

573,780

159,650

30,000
82,000
3,900
4,000
1,500
30,000
350
4,900
630
159,650

Post-Closing Balances
Debit
Credit
78,800
4,200
5,000
250
12,000
4,000
103,000
85,000
120,000
31,500
1,750
2,000
4,900
630
1,100
124,000
25,000
225,000
130
-

414,130

414,130

Income Statement

Relic Spotter Inc.

Income Statement
For the Year Ended December 31, 2012
Revenues:
Rental Revenue
Sales
Total Revenue

$ 124,400
$ 35,000
$ 159,400

Cost of Revenues:
Met Det Depreciation Exp.
Software Amortization
Cost of Goods Sold
Total Costs of Revenue
Gross Profit

$ (30,000)
$
(350)
$ (30,000)
$ (60,350)
$ 99,050

Selling, General, and Administative Expenses:

Salaries and Wages
Legal Fees
Advertising
Bldg. Depreciation
Total SG&A Expenses
Operating Income

$ (82,000)
$ (3,900)
$ (4,000)
$ (1,500)
$ (91,400)
$
7,650

Interest Revenue
Interest Expense
Pre-tax income

$
$
$

250
(4,900)
3,000

Income Tax Expense

Net Income

$
$

(630)
2,370

Page 10

Balance Sheet

Relic Spotter Inc.

Balance Sheet
December 31, 2012
Assets
Cash
Accounts Receivable
Notes Receivable
Interest Receivable
Inventory
Prepaid Advertising
Total Current Assets

$
$
$
$
$
$
$

12/31/2012
78,800
4,200
5,000
250
12,000
4,000
104,250

Land
Buildings
Metal Detectors
Less Accumulated Depreciation
Net Property, Plant, & Equipment

$
$
$
$
$

103,000
85,000
120,000
(31,500)
276,500

Software

12/31/2011
$
0
$
0
$
0
$
0
$
0
$
0
$
0
$
$
$
$
$

0
0
0
0
0

1,750 $

Total Assets

382,500 $

Liabilities and Shareholders' Equity

Accounts Payable
Interest Payable
Income Taxes Payable
Unearned Rental Revenue
Total Current Liabilities

$
$
$
$
$

2,000
4,900
630
1,100
8,630

$
$
$
$
$

0
0
0
0
0

Mortgage Payable
Total Liabilities

$
$

124,000 $
132,630 $

0
0

Common Stock
Additional Paid-in-Capital
Retained Earnings
Total Shareholders' Equity

$
$
$
$

25,000
225,000
(130)
249,870

$
$
$
$

0
0
0
0

382,500 $

Total Liabilities and Shareholders' Equity $

Page 11

No. Date
Transaction
Cash
Operating Investing Financing
(1)
4/1/2012 Sell shares
250,000
250,000
(2)
4/1/2012 Park loan
(3)
4/2/2012 Legal Fees
(3,900)
(3,900)
(4)
4/7/2012 Buy Bldg. & Land
(31,000)
(155,000) 124,000
(5) 5/25/2012 Bldg. Renovations
(33,000)
(33,000)
(6)
6/2/2012 Buy Metal Det.
(120,000)
(120,000)
(7) 6/30/2012 Buy Inventory
(8) 6/30/2012 Buy Software
(2,100)
(2,100)
(9) 6/30/2012 Buy Advertising
(8,000)
(8,000)
(10) 6/30/2012 Loan to Park
(5,000)
(5,000)
(11) 6/30/2012 Empl. Contracts
(12) 6/30/2012 Declare Dividends
(13) 7/31/2012 Pay Supplier
(2,000)
(2,000)
(14) 8/31/2012 Pay Dividends
(2,500)
(2,500)
(15) 12/1/2012 Rental prepayment
1,200
1,200
(16) 12/31/2012 Met Det revenues
120,100
120,100
(17) 12/31/2012 Buy Inventory
(38,000)
(38,000)
(18) 12/31/2012 Sundries sales
35,000
35,000
(19) 12/31/2012 COGS
(20) 12/31/2012 Pay Salaries
(82,000)
(82,000)
78,800
17,400
(310,100) 371,500
Cash Flow from Operations - Direct Method
Cash Collected from Customers
Cash Paid to Suppliers
Cash Paid to Employees
Cash Paid for Short-term Loans
Cash Paid for Miscellaneous Expenses
Net Cash from Operations

$
$
$
$
$
$

156,300
(40,000)
(82,000)
(5,000)
(11,900)
17,400

Relic Spotter Inc.

Statement of Cash Flows
For the Year Ended December 31, 2012
Cash Flow from Operations
Net Income
Adjustments to reconcile Net Income to
Cash from Operations:
Depreciation & Amortization
Change in Accounts Receivable
Change in Notes Receivable
Change in Interest Receivable
Change in Inventory
Change in Prepaid Advertising
Change in Accounts Payable
Change in Unearned Rental Revenue
Change in Interest Payable
Change in Income Taxes Payable
Net Cash from Operations

$ 31,850
$
(4,200)
$
(5,000)
$
(250)
$ (12,000)
$
(4,000)
$
2,000
$
1,100
$
4,900
$
630
$ 17,400

Cash Flow from Investing Activities

Purchase of Metal Detectors
Purchase of Land
Purchase of Buildings
Purchase of Software
Net Cash from Investing Activities

$ (120,000)
$ (103,000)
$ (85,000)
$
(2,100)
$ (310,100)

Cash Flow from Financing Activities

Payment of Dividends
Proceeds from Sale of Stock
Proceeds from Mortgage Payable
Net Cash from Financing Activities

$
(2,500)
$ 250,000
$ 124,000
$ 371,500

Net Change in Cash

78,800

Beginning Balance of Cash

Ending Balance of Cash

$
$

0
78,800

2,370