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Apollo Shoes Equity Investments

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See the attached lead schedule to show adjusting entries using the information below:

1. By luck, Shock-Proof Socks is one of our firm's clients. I checked with Dave Masterson, the audit manager, about how the company is doing. He said that after reporting no income for several years, they struck gold in 2007, reporting total income of $3,782,854.04. The company has yet to pay out any dividends though.

2. When I had lunch with Eric Unum, we discussed Apollo's recent purchase of Synergizer Battery stock. He indicated that Larry eventually wanted to purchase controlling stock in the company when Apollo started moving production in-house. While in his office, I examined the broker's confirmation, the cancelled check (# 3582), and examined the stock certificate for 20,000 shares in Apollo's name. The price of the stock was unchanged as of December 31 from its purchase price of 23 5/8. Personally, I would be surprised if Apollo will ever be able to purchase even 5% of Synergizer's stock.

3. You may want to think about the Phoneshoe patent, since the company has decided to discontinue research and development efforts on it.

4. Investment income is comprised the equity earning in Shock-Proof Socks and a transfer from the Controller's Clearing Account for $480,375.80. The clearing account is a temporary account Apollo uses for out of balance items and transactions they can't identify. If there is a balance at the end of the year, they either recognize miscellaneous income or expense to clear it out. The amount is the same amount as the December 26 purchase of the investment in Synergizer. You may want to investigate this further.

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