Mountain State Sporting Goods (Fraud Investigation Phases I-III.)

Appendix C GL Adjusting Entries 12/31/2007

Type Date Entry Date Split Debit Credit Balance Checking 54,162

2,374,496 2,345,855 54,162

Total Checking 2,374,496 2,345,855 82,803

Inventory 264,575

Adjusting Entry 12/31/2007 2/20/2008 Cos t of Goods Sold 16,572 281,147

Total Inventory 16,572 - 281,147

Equipment 80,118 3,380 83,498

Total Equipment 3,380 - 83,498

Accumulated Depreciation (60,236)

Adjusting Entry 12/31/2007 2/20/2008 Depreciation Expense 6,588 (66,824)

Total Accumulated Depreciation - 6,588 (66,824)

Other Asset 1,253 Total Other Asset - - 1,253

Payroll Liabilities Payable (30,190) 30,190 -

34,169 (34,169) Adjusting Entry 12/31/2007 3/7/2008 Sales 15,000 (49,169)

Total Payroll Liabilities Payable 30,190 49,169 (49,169)

Sales Tax Payable (13,802) 13,802 -

16,593 (16,593) Total Sales Tax Payable 13,802 16,593 (16,593)

Long Term Debt (34,441) Adjusting Entry 12/31/2007 3/7/2008 Sales 10,000 (44,441)

Total Long Term Debt - 10,000 (44,441)

Capital Stock (1,000)

Total Capital Stock - - (1,000)

Dividends - 9,066 9,066

Total Dividends 9,066 - 9,066

Retained Earnings (260,439) 15,488 (244,951)

Total Retained Earnings 15,488 - (244,951)

Type Date Entry Date Split Debit Credit Balance Sales -

2,364,496 (2,364,496)

Adjusting Entry 12/31/2007 3/7/2008

Split - Payroll Liability Split - Long Term Debt 25,000 (2,339,496)

Total Sales 25,000 2,364,496 (2,339,496)

Cost of Goods Sold - 1,937,034 1,937,034

Adjusting Entry 12/31/2007 2/20/2008 Inventory 16,572 1,920,462 Adjusting Entry 12/31/2007 3/9/2008 Auto Lease 6,000 1,926,462

Total Cost of Goods Sold 1,943,034 16,572 1,926,462

Advertising and Promotion - 6,278 6,278

Adjusting Entry 12/31/2007 3/9/2008 Travel and Entertainment 12,500 18,778

Total Advertising and Promotion 18,778 - 18,778

Auto Lease - 6,000 6,000

Adjusting Entry 12/31/2007 2/20/2008 Cost of Goods Sold 6,000 -

Total Auto Leas e 6,000 6,000 -

Delivery - 12,241 12,241

Total Delivery 12,241 - 12,241

Depreciation Expense -

Adjusting Entry 12/31/2007 2/20/2008 Accumulated Depreciation 6,588 6,588

Total Depreciation Expense 6,588 - 6,588

Insurance Expense - 27,609 27,609

Adjusting Entry 12/31/2007 3/9/2008 Outside Labor 5,000 32,609 Total Insurance Expense 32,609 - 32,609

Misc. Expense - 2,736 2,736

Total Misc. Expense 2,736 - 2,736

Office Supplies - 3,656 3,656

Total Office Supplies 3,656 - 3,656

Officers Compensation - 50,000 50,000

Total officers Compensation 50,000 - 50,000

Type Date Entry Date Split Debit Credit Balance

Outside Labor - 5,771 5,771

Adjusting Entry 12/31/2007 3/9/2008 Insurance 5,000 771 Total Outside Labor 5,771 5,000 771

Postage - 1,082 1,082

Total Postage 1,082 - 1,082

Rent Expense - 24,000 24,000

Total Rent Expense 24,000 - 24,000

Repairs and Maintenance - 1,268 1,268

Total Repairs and Maintenance 1,268 - 1,268

Salaries & Wages - 157,320 157,320

Total Salaries & Wages 157,320 - 157,320

Supplies - 1,670 1,670

Total Supplies 1,670 - 1,670 Taxes & Licenses -

50,232 50,232 Total Taxes & Licenses 50,232 - 50,232

Telephone Expense - 2,933 2,933

Total Telephone Expense 2,933 - 2,933 Travel and Entertainment -

17,717 17,717

Adjusting Entry 12/31/2007 3/7/2008 Advertising and Promotion 12,500 5,217

Total Travel and Entertainment 17,717 12,500 5,217

Utilities - 7,144 7,144

Total Utilities 7,144 - 7,144

4,832,773 4,832,773 -