Thumbs-Up Video Inc.

Journal

Date Description Debit Credit

1-Oct-98 Cash $1,65,000

1-Oct-98 Common Stock $1,65,000

1-Nov-98 Legal Fees $2,700

1-Nov-98 Cash $2,700

1-Nov-98 Land $43,000

1-Nov-98 Building $5,000
1-Nov-98 Mortgage Payable $33,600
1-Nov-98 Cash $14,400

1-Nov-98 Building $20,000

1-Nov-98 Cash $5,000
1-Nov-98 Accounts Payable $15,000

31-Dec-98 Tapes $1,00,000

31-Dec-98 Cash $1,00,000

31-Dec-98 Equipment $6,700

31-Dec-98 Cash $6,700

31-Dec-98 Software $1,000

31-Dec-98 Cash $1,000

2-Jan-89 Office Supplies $500

2-Jan-89 Cash $500
2-Jan-89 Prepaid Advertising $6,000
2-Jan-89 Cash $6,000

1-Jun-89 Tapes $18,750

 1-Jun-89 Accounts Payable $18,750
30-Jun-89 Cash $93,800
30-Jun-89 Accounts Receivable $2,200
30-Jun-89 Sales $96,000

30-Jun-89 Salaries Expense $62,000

30-Jun-89 Cash $62,000

ACCRUALS

30-Jun-89 Depreciation Expense $1,170

30-Jun-89 Accumulated Depreciation $1,170

30-Jun-89 Software Amortization $100

30-Jun-89 Software $100

30-Jun-89 Tape Amortization $18,021

30-Jun-89 Tapes $18,021

30-Jun-89 Mortgage Interest $2,900

30-Jun-89 Accrued Interest $2,900

30-Jun-89 Advertising $3,000

30-Jun-89 Prepaid Advertising $3,000
$5,51,841 $5,51,841

Calculation Given Bellow:

Building ($5,000/25 years) @ 6 months = $100

Renovations ($20,000/25 years) @ 6 months = $400
Equipment ($6,700/5 years) @ 6 months = $670
Total = $1,170
Software ($1,000/5 years) @ 6 months = $100

Regular ($100,000/3 years) @ 6 months = $16,667

New Releases $18,750
20% ($3,750/3 years) @ 1 month = $104
80% ($15,000/1 years) @ 1 month = $1,250
Total = $18,021

Answer to the Question No. 1:

Thumbs -Up Video, Inc.

T Accounts

Cash

Date Description Debit Date Description Credit

Paid up capital $1,65,000
Legal Fees $2,700
Land and $14,400
Building
Building and $20,000
Renovation
Video Tapes $1,00,000
Equipment $6,700
Software $1,000
Package
Office Supply $500
Advertising $6,000
Salary and $62,000
wages
Sales Revenue $93,800
$258800

Balance $45,500
Prepaid Advertising

Date Description Debit Date Description Credit

Cash A/C $3000

Balance $3000

Land

Date Description Debit Date Description Credit

14400
33600

Equipment

Date Description Debit Date Description Credit

Cash 6700

Balance 6700

Software Package

Date Description Debit Date Description Credit

Cash 1000

Balance 1000

Legal Fees

Date Description Debit Date Description Credit

Legal Fees $2700

Balance $2700

Accounts Payable

Date Description Debit Date Description Credit

Video 18750
Tapes

Balance 18750
Accounts Receivable

Date Description Debit Date Description Credit

Sales 2200
Revenue

Balance 2200

Building & Renovations

Date Description Debit Date Description Credit

20000

20000

Tape Inventory

Date Description Debit Date Description Credit

Cash 100000
Accounts 18750
Payable
Balance 118700

Office Supplies

Date Description Debit Date Description Credit

Cash(Offic 500
e Supply)

Balance $500

Salary Expenses

Date Description Debit Date Description Credit

Cash 62000
(Salary
Expense)

Balance 62000

Accrued Interest

Date Description Debit Date Description Credit

Interest 2900
Payable
 Balance 2900

Sales Revenue

Date Description Debit Date Description Credit

cash $93800
Accounts $2200
receivable
Balance $96000

Accumulated Depreciation

Dat Descriptio Debit Dat Description Credit

e n e
Accumulate 670
d
Depreciation
Of
equipment
Accumulate 500
d
Depreciation
Of building
Balance 1170

Mortgage Payable

Date Description Debit Date Description Credit

33600

33600

Capital

Date Description Debit Date Description Credit

Cash 165000

Balance 165000

Depreciation Expense

Date Description Debit Date Description Credit

Equipment 670
 Expense
Building 500
Expense
Balance 1170

Interest Expense

Date Description Debit Date Description Credit

Interest 2900
expense

Balance 2900

Tape Amortization

Dat Descriptio Debit Dat Description Credit

e n e
Amortizatio 18021
n of Tapes

Balance 18021

Software Amortization

Dat Descriptio Debit Dat Description Credit

e n e
Amortizatio 100
n of
Software

Balance 100

Advertising Expense

Date Description Debit Date Description Credit

Prepaid 3000
Advertising
expense

Balance 3000
 Answer of the question no 3:

Thumbs Up Video, Inc.

Income Statement
For the Period ending June 30,
1989
Income: Sales $96000
Total Income $96,000

Expenses:
Salaries and Wages (32000+30000) $62,000
Amortization:
Software $100
Video Tapes $18021 $18,121
Depreciation
Equipment $ 670
Building $500 $1,170
Advertising $3,000
Interest on mortgage $2,900
 Miscellaneous Office Supplies $500

Total Expenses $87,691

Net Income $8,309

Thumbs Up Video,
Inc.
Balance Sheet
as of June 30, 1989

Assets
Cash $45,500
Accounts Receivable $2,200
Prepaid Advertising $3,000

Total Current Assets $50,700

Tape Inventory 118750

Less: Amortization 18021 $1,00,729
Land $43,000
Building and Renovations $25,000
Less: Depreciation Equip $500 $24500
Equipment $6,700
Less: Depreciation 670 $6030
Net Building and $30,530
Appreciation
 Software Package 1000
Less: Amortization 100 $900
Preliminary Expenses $2700

Total Assets $2,28,559

Liabilities and Shareholder's

Equity

Accounts Payable $18,750

Accrued Interest $2,900

Total Current Liabilities $21,650

Mortgage Payable $33,600

Common Stock $1,65,000

Retained Earnings $5,609

Total Shareholder's $1,70,609

Equity

Total Liabilities and $2,25,859

Shareholder's Equity