Everclean Janitorial Service, Ltd. was started 2 years ago by Lauren Baird. Because business has been exceptionally
Question:
Lauren presented the statement of financial position to the bank's loan officer on January 2, 2018, confident that the company had met the terms of the loan. The loan officer was not impressed. She said, "We need financial statements audited by a public accountant." A public accountant was hired and immediately realized that the statement of financial position had been prepared from a trial balance and not from an adjusted trial balance. The adjustment data at the statement of financial position date consisted of the following.
1. Unbilled janitorial services performed were £3,900.
2. Janitorial supplies on hand were £2,100.
3. Prepaid insurance was a 3-year policy dated January 1, 2017.
4. December expenses incurred but unpaid at December 31, £620.
5. Interest on the bank loan was not recorded.
6. The amounts for property, plant, and equipment presented in the statement of financial position were reported net of accumulated depreciation (cost less accumulated depreciation). These amounts were £4,000 for cleaning equipment and £5,000 for delivery trucks as of January 1, 2017. Depreciation for 2017 was £2,000 for cleaning equipment and £5,000 for delivery trucks.
Instructions
With the class divided into groups, answer the following.
(a) Prepare a correct statement of financial position.
(b) Were the terms of the bank loan met? Explain.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Related Book For
Financial Accounting
ISBN: 978-1118978085
IFRS 3rd edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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