Your goal is to forecast an income statement, balance sheet and statement of cash flows for Manchester United (ManU) for 2013. For the purposes of this part, refer only to the attached summary financial statements and the following assumptions. If at all possible, please provide journal entries in the space provided below. If you really hate journal entries, indicate which accounts go up or down in the space below the description of the transaction, but don’t leave that space blank if you want partial credit. Do not worry if your accounts temporarily have negative balances (the transactions below are not sequential; they are aggregations over the period).
Need Journal Entries for the following questions:
A. Assume that contracts for media coverage are signed prior to the start of the season (e.g., contracts covering the 2013 season were signed in 2012), but the cash is received both during and after the end of the season (e.g., cash for the 2013 season media rights is received in 2013 and 2014). You forecast that ManU will earn £100,544 from broadcasting games during the 2013 season, of which £59,863 will be paid in cash during 2013 and £40,681 will remain uncollected (”trade receivables” in the current assets section on the balance sheet) at year end 2013. In addition, ManU will collect any amounts due it as of the beginning of 2013 during 2013. Finally, during 2013, ManU will sign a contract for £102,332 for rights to the 2014 season, payment to be received in 2014 and 2015.
B. Employees (including players) will earn £168,442 for services rendered in 2013. The ending balance in the compensation payable account will be £124,207. (You need to infer the amount paid to players to end up a balance of £124,207 in compensation payable.)
C. Taxes are paid in the first quarter of each year on the previous year’s profits. New taxes payable are recorded at year-end at 25% of pre-tax income.
D. The ending cash balance will be £114,066. Any excess cash is paid out as a dividend and any shortfall is made up by issuing stock.