Problem #1

Journalizing, Posting, Preparing a Trial Balance and Financial Statements

Joseph Tumara owns the Solon Heavy Bombers, a collegiate basketball team in the Phil-Am, Basketball
Association. Presented below is Nov. 30, 2010 trial balance representing activities from Jan. 1, 2010, together
with the account numbers and titles:

Solon Heavy Bombers

Trial Balance
Nov. 30, 2010

Acct. No. Account Titles Debit Credit

110 Cash P 1,129,800.00
120 Accounts Receivable 3,712,500.00
130 Uniform Supplies 31,050.00
140 Prepaid Insurance -
150 Land 2,025,000.00
160 Training Facilities 12,750,000.00
170 Training Equipment 2,625,000.00
180 Player Contracts 11,250,000.00
210 Notes Payable P 1,800,000.00
220 Accounts Payable 4,725,000.00
230 Mortgage Payable 10,500,000.00
310 Tumara, Capital 17,643,750.00
320 Tumara, Withdrawals 1,875,000.00
410 Game Attendance Revenues 10,125,000.00
510 Salaries Expense 4,875,000.00
520 Advertising Expense 400,950.00
530 Travel Expense 1,532,400.00
540 Laundry Expense 528,000.00
550 Medical Expense 194,550.00
560 Utilities Expense 1,734,000.00
570 Miscellaneous Expense 130,500.00
Totals P 44,793,750.00 P 44,793,750.00

During the month of December 2010, the Bombers were participating in the 2010 playoffs and the following
transactions took place:

Dec.1 Acquired the contract of Dennis Vallescas from the Negros Navigators for P1,875,000; paying P225,000 in
cash and financing the P1,650,000 by issuing a note payable.
2 Collected P2,809,500 on accounts receivable from season-ticket holders.
3 Settled accounts payable, P1,657,500.
4 Paid for TV advertising, P78,600.
5 Acquired on account additional uniforms for the upcoming series with the Ayco Taylors,
P30,750.
9 Billed season-ticket holders for the last five games, P320,250
10 Paid the amount due on this date for a note payable, P600,000.
11 Acquired insurance for the months of December to June, P215,250. Record as prepaid insurance
12 Acquired additional training equipment on account, P319,500.
15 Paid players’ salaries, P1,136,250.
17 Received P3,316,050 cash for tickets to playoff games.
19 Paid travel expenses to Love Travels, P588,000.
20 Paid laundry expenses, P12,600.
23 Paid creditors, P941,850.
25 Paid miscellaneous expense, P26,850.
26 Paid medical expenses, P18,900.
27 Paid utilities expenses, P210,450.
28 Paid players’ salaries, P1,240,650.
30 Joseph Tumara withdrew P250,000.

Required:
1. Enter the amounts from the November 2010 trial balance into the appropriate ledger accounts.
2. Prepare the journal entries for the December transactions.
3. Post the entries to the ledger/t-accounts.
4. Prepare a trial balance as at Dec. 31, 2010.
5. Prepare an income statement for the year ended Dec. 31, 2010 and a Balance sheet as at Dec. 31, 2010 using
the work sheet.