please do it in a word document
To be used in class as class activities. Students are required to prepare for the cases before class time. Students may be allowed to form groups to present their answers.
In order to complete your case analysis successfully, you should consider:
- identifying the role you are playing,
- assessing the financial reporting landscape considering the user needs, constraints, and business environment,
- identifying the issues,
- analyzing the issues (qualitatively and quantitatively), and
- providing a recommendation for each issue identified in the case.
You are required to prepare for the case before the class and bring any documents that will support your analysis. An average grade will come from you answering questions with basic coverage and accuracy, showing all your preparation. Additional points come from including greater detail, astute and informed commentary where appropriate, and connections to readings and other content.
Henrietta’s Pine BakeryBackground
You are an Analyst for the professional service firm, BUSI 1043 LLP. Your firm specializes in providing a wide variety of internal business solutions for different clients. Given the outstanding feedback you received on your first engagement working for Big Spenders Inc., a Senior Manager in the Financial Advisory group requested your support on a compilation engagement.
Henrietta’s was established in 1963 when it first opened its doors in Dwight, Muskoka on highway 60. Over the past 50 years, there have been four owners and is currently owned by Carine & Geoff Harris who incorporated and took over the store on January 1, 2013. Their sons, Kyle and Nicholas have been an intricate part of the business from dishwashing to head bakers. Henrietta’s has grown over the years with the addition of new items all the time, but the “Sticky Buns and Clouds” remain the most popular items amongst the 150 varieties of bread and pastries.
Henrietta’s runs out of 90 square meters (1,000 share feet) of space. It has one entrance into the bakery and doors leading out to highway 60. Henrietta’s pays $5,000 per month for the rental of the space. Carine and Geoff were able to negotiate with the landlord and were not required to pay the first month’s rend in advance. All of the rental payments are current and up to date. For the last two years, Henrietta’s has had a very reliable accountant prepare its year-end financial statements and everything has been correct. This year, Henrietta’s accountant retired and Geoff did the best he could to record his own financial information. For the information he was not sure about, he kept all of the required supporting documentation. Geoff hired your firm, BUSI 1043 LLP to prepare his financial statements for the year. Geoff supplied you with his unadjusted trial balance and the information in Exhibit I to assist you.
- The amount currently sitting in prepaids arose due the insurance policy last year. Geoff didn’t know how to correct it, so he left it. This year’s insurance policy was purchased on November 1 for $9,000. The policy runs from November 1 to October 31 of each year.
- Geoff has a note that he owed $900 in wages to his employees for the period ending December 31st.
- The loan was incurred when the bakery was opened. The loan carried an interest rate of 8%. The interest is payable two months after year-end, and the principal is due in 2019.
- Henrietta’s will sometimes book special events with small organizations that are allowed to pay after the event has taken place. On December 29th, a small company had a gathering at the bakery. The company was billed $1,089 and had 30 days to pay it. Geoff has not yet recorded this in his financial records.
- Henrietta’s declared a dividend of $5,000 on December 30th.
- Geoff didn’t know how to record amortization for the year and so left it for you to record. Amortization for all assets is charged using a straight-line method by taking the cost of the asset and dividing it by its expected useful life. The assets have expected useful lives as follows:
- Computer: 5 years
- Bakery equipment: 10 years
- Furniture and fixtures: 20 years
- The information shows that Henrietta’s owes $400 for a telephone bill and $400 for electricity for December. These amounts have not been recorded yet.
Henrietta’s Pine Bakery
Unadjusted Trial Balance
December 31, 2015Account NameDebitCreditCash$35,000
Accumulated Amortization – Computers
Accumulated Amortization – Bakery Equipment
18,000Furniture and Fixtures150,000
Accumulated Amortization – Furniture and Fixtures
Based on the information, you have prepared the adjusting journal entries, an adjusting trial balance, the statement of earnings (income statement), statement of financial position (balance sheet), and statement of retained earnings. After you have completed the statements, prepare the closing journal entries and the posting closing trial balance. Ensure you show all of your work, and prepare proper journal entries and properly formatted financial statements.
Note to students: Issues are hidden within the case. It is your responsibility to read the case facts and identify the critical issues required for discussion and analysis.
Case Analysis 2 will be marked in its entirety out of 100. The following scale indicates the criteria students are to adhere to, and their relative weights to the assignment overall.
Activity/Competencies Demonstrated% of Final GradeIdentification and Analysis of Issues/100a. Adjusting Entries/17b. Adjusting Trial Balance/10c. Balance Sheet/28d. Statement of Operations/13e. Statement of Retained Earnings/6f. Closing Entries/16g. Post-Closing Trial Balance/10Total/100