Apple Blossom Cologne Company Financial Statements

Apple Blossom Cologne Company
K-4
Federal Income Taxes Payable
2-3-04
12/31/2003
CA
(Proposed by Client)
=========================================================================
Tax
Tax
Liability
Expense
Balance 12-31-02
63772 @
Additions: 2003 taxes
100000
100000
163772
Payments:
Final payment Jan. 2003
on 2002 taxes
63772 t
First quarter deposit, 2003 taxes
25000 t
Second quarter deposit, 2003 taxes
25000 t
Third quarter deposit, 2003 taxes
25000 t
138772
Balance 12-31-03, per client
25000
100000
^
^
(1 Adjustments to income tax and income tax
(TB - BS)
(TB - BS)
)
liability resulting from audit adjustments.
Reference (AJE #19) to record tax adjustment:
940 Federal income tax expense
(15557)
307
Federal income taxes payable
(15557)
Balance per audit
9443
84442,8
(1) Income tax expense per audit:
15% 15% on first 50000
25% 25% on first 25000
34% 34% on amount over 75000
^
@
t
footed
Agreed to prior year's audit working papers
traced to cash disbursements journal
207920
Per audit
Per client
7500
6250
70693
84443
100000
(15557)

Retained Earnings
12-31-03
K-1
2-5-04
CA
=====================================================================
==
=====================================================================
==
Balance 12-31-02
529683 S
(TB-BS)
Dividends
23125 B
(TB-BS)
506558
Net Income, 2003, before audit adjustments
318585 &
(TB-BS)
Balance, 12-31-02, per client
825143 N
Net effect of 2002 audit adjustments:
(Adjusting entries debit income $161,655 and
credit income $41,547)
Balance, 12-31-03, after audit adjustments
Agreed to income statement--working trial

& balance (TB-IS).
S Agreed to prior year's audit working papers.
Traced to corporate minutes and to liability B Dividends payable.
N Reconciles to (TB-BS) per client.
Q Reconciles to (TB-BS) per audit.
Working Trial Balance Balance Sheet
12-31-03
Per
Per Audit
Book
12-31Assets
Ref
12-31-02
03
Debit
101 Cash-Big City
A-1
313617
846341
102 Cash-Second National
A-3
3913
96968
103 Petty Cash
A-7
420
300
105 Account Receivable
B-1
139304
212703
106 Allowance for bad debt
B-3
-11883
-19919
14330
107 Miscellaneous receivable
B-6
0
0
3750
109 Inventory
C-1
873768
718347
32840
110 Prepaid insurance
D-1
33336
98896
111 Prepaid rent
D-3
3000
1230
112 Office Supplies inventory
D-3
8657
9964
(120108) &
705035
01
Adjusment
1,4
11
7,17
Credit
10000
204
3378
6
1,2,3
Per
Audit
Recl
12-3103
Deb
836541
36968
296
209127
-5589
3750
732487
98896
1230
9964
113
115
116
201
210
220
221
230
231
240
241
250
251
Small tools inventory

Investment in furniture
Allow. for unreal gain
Long term investment
Land
Buildings
Accum depr building
Machinery and Equipment
Accum depr equipment
Automotive equipment
Accum depr automotive
Office Furniture
Accum depr off. Furniture
Total Assets
Liabilities
301 Account Payable
302 Accrued Payroll Taxes
303 Wages and Salaries payable
304 Accrued Properly Taxes
305 Accrued interest
306 Dividend Payable
Federal Income Tax
307 Payable
308 Notes Payable-Short term
Lease obligation - short
350 term
401 Notes Payable- long term
450 Lease obligation - long term
Total Liabilities
Owner's Equity
501
505
506
601
Common Stock
Other contributed capital
Unreal gain/loss invest
Retained Earnings
605 Dividends
610 Current net income
Total owners equity
TOTAL OWN EQUTY +
LIABILITY
D-3
E-1
E-1
E-6
F-1
F-1
F-1
F-1
F-1
F-1
F-1
F-1
F-1
7162
474318
6473
0
82230
276263
-63416
340843
-160866
99423
-32798
106433
-37381
2847037
6541
223099
6473
0
42230
276263
-74623
1006045
-189848
99425
-77654
114899
-43113
3275915
G-1
H-1
H-2
H-3
I-1
H-3
223161
113846
81239
14113
10623
17373
135550
86253
0
21988
15833
23125
H-4
I-1
65772
123000
25000
0
F-6
I-1
F-8
0
0
0
649331
0
475000
0
782749
J-1
J-1
E-1
K-1
K-1,
H-3
TBIS
925000
736550
6473
272435
925000
736550
6473
529683
-17373
-23125
274283
2197706
318585
2493166
2847037
3275915
97600
10
72898
9,11
81030
1930
13,11
12
20892
4473
11983
72173
11989
9
8
9896
18,14
88250
42992
95921
10,17
18
18
4114
13
18
16
223800
129245
95921
21988
19947
23125
4108
0
4473
16
74800
14
4473
475000
70327
1067304
925000
736550
-5510
529683
-23125
177135
46672
188122
2350720
3418024

Working Total Balance Income Statement
12-31-03
Working
Paper
6541
248526
-5516
72898
42230
276263
-74623
1087075
-197814
99425
-77654
114899
-43113
3418024
TB-IS
2 3 - 04
CA
Per
Audit
12-31-02
Per
Books
12-31-03
Adjustments
Debit
Credit
Per
Audit
12-31-03
References
REVENUE
701 Sales
703 Sales returns & allowances
Net Sales
EXPENSES
801 COGS
Gross Margin
OPERATING EXPENSES
820 Wages & Salary Expense
821 Payroll Tax Exp
822 Depr. Exp.
823 Rent Expense
824 Office Supplies exp.
825 Small tools exp
826 Advertising exp.
827 Insurances
828 Repairs and Maintenance
829 Property Tax
830 Utilities
831 Professional Fees
832 Misc. Expense
833 Provision For bad debt
834 Freight Exp.
Total operating expense
Net Income From Operations
H-1
H-1
F-1
D-3
D-3
D-3
D-1
F-5
H-3
B-6
OTHER INCOME EXPENSE

J-1
901 Interest Expense
B-3
910 Gain (Loss) Sales of
B-3
920 Income from
I-3
930 Gain (Loss) Sale of
950 Misc. Iincme
Net Other Income
Net Income Before Tax
K-1
980 Federal Income Tax
Net Income
3.906.577
(29.880)
3.876.757
4.272.623
(33.051)
4.239.372
1.080
1.748
2
3
4.271.54
(34.799)
4.236.78
1.596.800
2.279.957
1.742.508
2.497.069
16.480
7,17
1.758.98
2.477.76
1.528.700
129.939
84.482
3,750
9.683
9.959
12.718
28.930
17.869
14.113
11.742
13.347
494
11.156
31.641
1.881879
898.078
1.618.843
128.033
80.439
3,750
12.380
6.419
84.934
32.765
14.840
21.988
14.760
37.140
823
22.790
46.310
2.085.436
411.699
123.192
15.091
3.896
18
18
13,14
137
67
1.100
17
230
17
1.741.83
143.124
82.373
3.750
12.317
6.419
44.934
32.765
8.057
21.988
15.860
37.140
1.055
9.210
46.310
2.207.33
270.422
(27.500)
(21.146)
25.975
7.393
(13.270)
10.000
6.932
418.585
100.000
378.783
9.379
18.638
10.000
517
898.595
123.772
274.823
4.114
1.980
12
6250
13
13.580
15
3.970
11
(25.560)
25.975
11.363
(13.270)
177.155
(3.192)
267.230
20.892
16.872

Proposed Adjusting Journal Entries
12-31-03
ACCOUNT DESCRIPTION
(AJE #1)
Allowance for Bad Debts
Account Receivable
To write off uncollectible account
Per (B-1)
(AJE #2)
Sales
Account Receivables
To correct errors in pricing customer
Order per (B-1)
(AJE #3)
Sales Returns and allowances
Account Receivables
To adjust account receivable
For damaged merchandise per (B-1)
(AJE #4)
Allowances for bad debts
Provision for Bad debts
To adjust allowance account per
Analysis on (B-6)
(AJE #5)
Miscellanous income
Cash Big City National
To correct errors in recording
Bank transfer per (A-5)
AJE #6
Office Supplies Expense
Repairs and Maintenance expense
Petty Cash
To adjust for unreimbursement
Vouchers in petty cash per (A-7)
(AJE #7)
Cost of Goods Sold
Inventory
To correct client FIFO costing error
Per (C-1)
(AJE #8)
Unrealized gain/loss on investments
Allow. Unr gain/loss on inv.
To adjust allowance for unrealized
Gain/loss on investment per (E-1)
(AJE #9)
Long-term investment
Investment
To transfer bonds to long-term
Category per (E-6)
ACCOUNT
NUMBER
DEBIT
106
105
750
701
105
1.080
703
105
1748
106
833
13.580
950
101
10.000
824
828
103
137
67
801
109
1000
506
116
11983
201
115
72173
AJE
2 - 3 - 04
CA
1 of 3
CREDIT
750
1.080
1748
13.580
10.000
204
1000
11983
72173
Apple Blossom Company

12-31-03
ACCOUNT DESCRIPTION
(AJE #10)
Investment in securities
Account Payable
To record securities purchased
On account per (E-1)
(AJE #11)
Long-term investments
Misc. receivable (Int.)
Income from investments
To amortize bond discount per (E-6)
(AJE #12)
Accumulated depreciation M&E
Depreciation expense
To correct error in calculating depreciation
Per (F-4)
(AJE #13)
Machiney and equipment
Repairs and
maintenance expense
Accumulated
depreciation-M&E
To capitalize items improperly
expensed
As repairs and maintenance per
(F-5)
(AJE #14)
Machinery and equipment
Lease obligation Longterm
Accumulated
Depreciation-M&E
To capitalize lease obligation and
related
And related asset per (F-6)
(AJE #15)
Interest expense
Accrued interest payable
To accrue interest on lease
Obligation per (F-6)
(AJE #16)
Loss obligation-Long-term
Lease obligation-Shortterm
AJE
2 - 3 - 04
CA
2 of 3
ACCOUNT
NUMBER
DEBIT
115
301
37600
201
107
920
220
3750
231
822
1980
230
828
6.250
822
231
156
230
822
450
74.800
3.740
CREDIT
37600
3970
1980
6.250
156
74.800
231
3.740
901
305
4.114
450
350
4.473
4.114
4.473
To reclassify partion of lease as

Short term per (F-6)

AJE
2 3 - 04
12 31 03
JWP
3 of 3
ACCOUNT DESCRIPTION
(AJE #18)
Wage and salary expense
Payroll tax expense
Accrued payroll taxes
Wages and salaries
payable
To accrue wages and salaries per
(H-2)
(AJE #19)
Federal income tax payable
Federal income tax
expense
To adjust income taxes per (H-4)

Proposed Reclassification Entries
December 31, 2003
ACCOUNT
DESCRIPTION
None Required
ACCOUNT
NUMBER
DEBIT
820
821
302
303
123.192
15.091
307
940
20.892
CREDIT
42.992
95.291
20.892
RJE
2 3 04
ACCOUNT
NUMBER
DEBIT
CREDIT
Certified Public Accountans

9 Februari 2004
APPLE BLOSSOM COLOGNE COMPANY
Balance Sheet
December 31, 2003 and 2002
ASSETS
Current Assets
2003
Cash
$873,805
Accounts Receivable less allowance for losses
2003.55.589; 2002.511.889
203,538
Miscellaneous receivable (Notes 1 and 2)
3,750
Inventories (Note 1)
752,487
Prepaid expenses
56,391
Investment in accurities (Notes 1 and 2)
182,950
Total Current Assets
2,072,921
Long-term investment (Notes 1 and 2)
72,393
PPE at cost (Note 1):
Land
82,250
Buildings
276,263
Machinery and equipment
1,087,095
Automotive equipment
99,425
Office furniture and fixtures
114,833
1,659,866
Less accumulated depreciation
387,156
1,272,710
TOTAL ASSETS
$3,418,024
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Account payable
$223,800
Account liabilities
266,471
Notes payable (Note 3)
Dividens payable
23,125
Income taxes payable (Note 4)
4,108
Current posotion of lease obligation (Note 5)
4,473
Total current liabilities
521,977
Long term debt due after one year (Note 3)
475,000
2002
$519,955
127,615
873,766
56,155
480,991
2,058,482
82,250
276,263
540,845
99,425
106,433
1,105,216
316,661
788,555
$2,847,037
$223,161
219,823
125,000
17,575
63,772
649,331
Long term leaase obligation (Note 5)

Total Liabilities
70,327
1,067,304
Stockholders Equity:
Common stock, par value $100, authorize 20,000
shares,Issued and outstanding 9,250 shares
925,000
Contributed capital in excess of par value
736,550
Unrealized gain <loss> on investments
(5,510)
Retained earnings
694,680
Total Stockholders Equity
2,350,720
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY
$3,418,024$2,847,03
Statement of Income
Years Ended December 31, 2003 and 2002
2003
Net sales and other revenues
$4,236,744
Cost of good sold
1,758,983
Gross margin
2,477,761
Operating expenses:
Selling, general, and administrative (Note 5)
2,124,964
Depreciation (Note 1)
82,375
2,207,339
Operating Income
270,422
Other income (expenses) and adjustment:
Interest
(25,260)
Other income
11,363
Gain on sale of fixed assets
(15,270)
Gain on sale of investments
25,975
Net income before federal income taxes
267,230
Provision for income taxes (Notes 1 and 2)
79,108
NET INCOME
188,122
Earnings per common share (Note 7)
$20.34

Statement of Changes in Stockholders Equity
2003
649,331
925,000
736,550
6,473
529,683
2,197,706
2002
$3,876,757
1,596,800
2,279,957
1,817,457
64,422
1,881,879
398,078
(27,500)
9,379
18,638
398,595
123,772
$274,823
$29.71
2002
Common Stock:
Commont stock at beginning of year
Common stock at end of year
$925,000
$925,000
$925,000
$925,000
Contributed capital:
Contributed capital at beginning of year
Contributed capital at end of year
$736,550
$736,550
$736,550
$736,550
Unrealized Gain <Loss> on investments:

Unrealized Gain <Loss> at beginning of year
$6,473
$4,496
Change in urealized gain <loss>

Unrealized Gain <Loss> at end of year
(11,983)
($5,510)
1,977
$6,473
Retained Earnings:
Retained earnings at beginning of year
Net income for the year
Dividends
Retained earnings at end of year
$529,683
188,122
(23,125)
$694,680
$272,435
274,823
(17,575)
$529,683

Statement of Cash Flows
2003
Cash flows from operating activities:
Net income
$188,122
Add <Deduct> items not using <providing> cash:
Depreciation
82,375
Change in accounts receivable
(69,623)
Change in allowance for bad debts
(6,300)
Change in miscellaneous receivables
(3,750)
Change in inventory
121,279
Change in prepaid expenses
(236)
Securities purchased on account
(37,600)
Change in accounts payable
639
Change in accrued liabilities
46,648
Change in income taxes payable
(59,664)
Gain or loss sale of assets
15,270
Gain or loss sale of investments
(25,975)
Amortization of bond discount
(220)
Net cash provided operating activities
$250,965
Cash flows from investing activities:
Cash provided
Sale of assets
Sale of securities
Cash disbursed
Purchase of assets
Purchase of securities
Net cash provided <used> investing activities
Cash flows from financing activities:
Cash provided
Issuance of notes payable
Cash disburssed
Divident paid
Payments on notes
Net cash provided <used> financing activities
2002
$274,823
64,422
4,509
(1,880)
(285,627)
4,049
82,512
28,210
49,542
(18,638)
$201,922
12,450
372,243
39,638
519,450
94,783
(229,540)
54,016
147,320
($161,698)
475,000
245,000
17,575
125,000
$332,425
13,875
120,000
$111,125
Net increase <decrease> in cash
353,850
151,349
Cash at beginning of year

Cash at end of year
$519,955
$873,805
368,606
$519,955
$15,938
138,772
$16,875
74,230
Supplemental Disclosures of Cash Flow Information

Interest paid
Income taxes paid
Supplemental Schedule of Noncash Transactions
Equipment purchased on capital lease (Note 5)
Securities purchased on account
$74,800
37,600

Apple Blossom Cologne Company Financial Statements

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Apple Blossom Cologne Company