Quinn Inc. (QI) was formed in March 20X8 when Devon Goodman, Scott Adams, and Chase Beson pooled their resources and talents to take advantage of a booming economy in western Canada. The company selected 28 February as the date of its year- end. Beson had been making basic accounting entries for the first 10 months of operation and prepared a draft unaudited statement of financial position as of 31 December 20X8 (Exhibit 1). There is some information provided about the events of the year (Exhibit 2). Beson is entitled to sell his shares in QI to Goodman, based on a multiple of QI’s net income for the year ended 28 February 20X9. Goodman now owns 21 shares of QI.
It is now 27 January 20X9. Two weeks ago, Goodman hired you, Chen Ngu, Public Accountant, to be QI’s Chief Financial Officer. Goodman has requested a revised statement of financial position as of 31 December 20X8 and revised net earnings for the 10 months ended 31 December 20X8. She also asks that you provide her with journal entries to sup-port adjustments you make to the draft 31 December statement of financial position and earnings figures provided by Beson. She is interested in accounting choices that present QI as a strong company, but she has specified that generally accepted accounting principles must be adopted. QI is not subject to income tax.
Respond to the requests of Devon Goodman.