INSTRUCTIONS AND BACKGROUND INFORMATION

The Verlander Corporation was incorporated on January 1, 2017. The company manufactures pitching gloves for baseball players that are signed by a starting pitcher for the 2017 World Series Champions. The company is based in Houston, TX.

Listed on the following page is a series of 12 hypothetical events that occurred during 2017.

1. Provide/create the December 31, 2017 balance sheet for Verlander Corporation. (Hint: It should balance.) Please properly classify the various items between “current” and “non-current”.
2. Provide/create the 2017 income statement for Verlander Corporation.
3. Ignore the effects, if any, of income taxes.

LIST OF EVENTS IN 2017 AFFECTING VERLANDER CORPORATION

1. Verlander Corporation was incorporated on January 1, 2017. The company raised a total of $300,000 cash in equity financing by issuing shares of stock.
2. On January 1, the company purchased a machine to make the baseball gloves. The machine cost $200,000 and Verlander paid $90,000 in cash and borrowed the rest using a note payable. The estimated life of the machine is ten (10) years. The company will depreciate the machine on a straight-line basis (meaning the same amount every year) and expects a zero-salvage value for the machine (meaning it does not expect it to be worth anything at the end of the ten years). You may ignore the effects of interest on the note for this problem.
3. The company entered into a rental agreement with Comerica Park to sell its baseball equipment in a stand at the ballpark. The agreement called for two (2) years of prepaid rent of $60,000. Verlander paid this amount on January 1.
4. Verlander purchased inventory for $150,000 and paid $90,000 in cash with the rest put on account.
5. Verlander advertised by having the ushers in the baseball stadium wear t-shirts with a picture of Verlander using a baseball glove, the 2017 slogan of the Houston Astros, a map to his stand, and the prices of the gloves all printed on the shirt. These shirts cost $2,000. Verlander paid cash for the shirts and gave them away to all of the vendors.
6. Verlander sold inventory that cost $60,000 for $150,000 in cash and an accounts receivable for $100,000 (sold for a grand total of $250,000 -- His signature on those gloves is worth a lot!)
7. Verlander paid off $35,000 of its accounts payable.
8. Verlander collected $45,000 of its accounts receivables.
9. Kobe Bryan (a former overpaid basketball player for the Los Angeles Lakers) attended an Astros game during the NBA finals (since he had the spare time) and became interested in the trademark logo that Verlander was using beneath his signature on the glove. He offered Verlander $150,000 to sell the logo so he could begin using it himself. Verlander had never considered the logo to be worth anything at all, was very interested in the offer but in the end turned it down. Verlander immediately called his accountant (you) to report how much the logo was worth.
10. Throughout the year for all pay periods prior to the last pay period the company paid wages of $55,000 in cash ($5,000 per month for each of the first 11 months of the year). The last pay period of the year was for December when the employees again earned $5,000. However, this amount would not be paid until some time in January.
11. On December 31st one of Verlander’s biggest fans stopped at the store and placed an order for next year’s model glove. The customer gave Verlander $18,000 in cash, the full purchase price for the gloves, and Verlander promised to manufacture and ship the new gloves next February.
12. Verlander paid a cash dividend to shareholders in the amount of $10,000.

INSTRUCTIONS AND BACKGROUND INFORMATION The Verlander Corporatio...