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

Appendix D GL Adjusting Entries 12/31/2008

Type Date Entry Date Split Debit Credit Balance Checking 82,803

2,513,479 2,532,378 54,162

Total Checking 2,513,479 2,532,378 63,904

Inventory 281,147

Adjusting Entry 12/31/2008 02/16/2009 Cost of Goods Sold 15,629 296,776

Total Inventory 15,629 - 296,776

Equipment 83,498

Adjusting Entry 12/31/2008 02/28/2009 Loans to Employees 40,000 123,498

Total Equipment 40,000 - 123,498

Accumulated Depreciation (66,824)

Adjusting Entry 12/31/2008 02/16/2009 Depreciation Expense 6,534 (73,358)

Total Accumulated Depreciation - 6,534 (73,358)

Loan to Employees - 40,000 40,000

Adjusting Entry 12/31/2008 02/28/2009 Equipment 40,000 - Total Loan to Employees 40,000 40,000 -

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

Payroll Liabilities Payable (49,169) 34,169 (15,000)

36,789 (51,789) Total Payroll Liabilities Payable 34,169 36,789 (51,789)

Sales Tax Payable (16,593) 16,593 -

18,410 (18,410) Total Sales Tax Payable 16,593 18,410 (18,410)

Long Term Debt (44,441) 1,862 (42,579)

Total Long Term Debt 1,862 - (42,579)

Capital Stock (1,000) Total Capital Stock - - (1,000)

Retained Earnings (270,674) Total Retained Earnings - - (270,674)

Type Date Entry Date Split Debit Credit Balance Sales -

2,513,479 (2,513,479) Total Sales - 2,513,479 (2,513,479)

Cost of Goods Sold - 2,090,538 2,090,538

Adjusting Entry 12/31/2008 02/16/2009 Auto Lease 6,000 2,096,538 Adjusting Entry 12/31/2008 02/16/2009 Inventory 15,629 2,080,909

Total Cos t of Goods Sold 2,096,538 15,629 2,080,909

Advertising and Promotion - 7,512 7,512

Adjusting Entry 12/31/2008 02/28/2009 Travel and Entertainment 20,000 27,512

Total Advertis ing and Promotion 27,512 - 27,512

Auto Leas e - 6,000 6,000

Adjusting Entry 12/31/2008 02/16/2009 Cost of Goods Sold 6,000 -

Total Auto Lease 6,000 6,000 -

Delivery - 12,669 12,669

Total Delivery 12,669 - 12,669

Depreciation Expense -

Adjusting Entry 12/31/2008 02/16/2009 Accumulated Depreciation 6,534 6,534

Total Depreciation Expense 6,534 - 6,534

Insurance Expense - 30,149 30,149

Adjusting Entry 12/31/2008 02/28/2009 Outs ide Labor 8,000 38,149 Total Insurance Expense 38,149 - 38,149

Interes t Expense - -

Total Interes t Expense - - -

Type Date Entry Date Split Debit Credit Balance

Misc. Expense - 3,115 3,115

Total Mis c. Expens e 3,115 - 3,115

Office Supplies - 4,350 4,350

Total Office Supplies 4,350 - 4,350

Officers Compensation - 50,000 50,000

Total officers Compensation 50,000 - 50,000

Outs ide Labor - 8,698 8,698

Adjusting Entry 12/31/2008 02/28/2009 Insurance 8,000 698 Total Outside Labor 8,698 8,000 698

Postage - 1,310 1,310

Total Pos tage 1,310 - 1,310

Rent Expens e - 24,000 24,000

Total Rent Expense 24,000 - 24,000

Repairs and Maintenance - 1,769 1,769

Total Repairs and Maintenance 1,769 - 1,769

Salaries & Wages - 161,315 161,315

Total Salaries & Wages 161,315 - 161,315

Supplies - 2,021 2,021

Total Supplies 2,021 - 2,021

Type Date Entry Date Split Debit Credit Balance Taxes & Licenses -

54,543 54,543 Total Taxes & Licenses 54,543 - 54,543

Telephone Expense - 3,667 3,667

Total Telephone Expense 3,667 - 3,667 Travel and Entertainment -

26,051 26,051

Adjusting Entry 12/31/2008 02/28/2009 Advertising and Promotion 20,000 6,051

Total Travel and Entertainment 26,051 20,000 6,051

Utilities - 7,246 7,246

Total Utilities 7,246 - 7,246

Interest Income - -

Total Interest Income - - -

5,197,219 5,197,219 -