A. Explain how the income statement relates to the statement of changes in equity B. Explain how the statement of changes in equity relates to the statement of financial position. C. Explain how the statement of cash flows relates to the statement of financial position.

Question #2:

Jack the newly hired accountant found an insurance expense account in addition to an account called prepaid insurance in the post-closing trial balance. Should he be concerned? Explain.(2 Marks)

Question #3:

Is it possible to have a debit balance for the AFDA account? If so, describe what likely caused this to happen and how one should proceed going forward.

Question #2 - Application Questions

Question #2a(10 Marks)

Wedona Energy Consultants prepares adjusting entries monthly. Based on an analysis of the unadjusted trial balance at January 31, 2021, the following information was available for the preparation of the January 31, 2021 month-end adjusting entries.

1. Depreciation on equipment is $600 for the month of January 2021.
2. Of the $11,400 balance in Unearned Consulting Fees, $8,700 has been earned.
3. The Prepaid Rent account showed a balance of $13,500. This was paid on January 1, 2021 and represents nine months of rent.
4. Accrued wages at January 31, 2021 totaled $18,500
5. Consulting fees earned and unbilled at month-end were $6,150
6. The Store Supplies account had a balance of $800 at on January 1, 2021. During January $1,780 of supplies were purchased and debited to the account. At month-end, a count of supplies revealed a balance of $650.

Please make any adjusting journal entries required for the month ended January 31, 2021.

Question #2b(10 Marks)

Finn Company has just received its June 30 bank statement from City Bank. The bank statement and the cash account, summarized below, are to be reconciled for the month of June. Bank Statement
Balance, June 1	$5,200
Deposits	9,200
Notes receivable collected for X company
Principal	4,000
Interest	240
Cheques cashed	(7,475)
Bank service charge	(20)
NSF Cheque, Jimmy Dean	(100)
Balance, June 30	$11,045
Cash Account:
Balance, June 1	$5,500
Cash Receipts	9,000
Cheques Written	(7,000)
Balance, June 30	$6,800
Other Data	May	June
Deposit in transit at month end	$600	$400
Outstanding cheques at month end	300	525

Required: a. Please make a bank reconciliation for June 30(6 Marks) Finn Company Bank Reconciliation June 30 Bank Reconciliation

Book Balance (Company's Books) Bank Statement

Beg Balance		Beg Balance
Add:		Add:
Less:		Less:
Adjusted Bank Balance		Adjusted Bank Balance

b. Complete the Necessary Journal Entries(4 Marks) Descriptions are not needed

GENERAL JOURNAL

Ref #	Account Title	Dr.	Cr.

Question 2c(5 Marks)

Acrobat Inc. has the following account balances at December 31 of the current year: Accounts Receivable $315,000 and Allowance for Doubtful Accounts $3,300 (credit balance).Acrobat Inc. uses the aging of accounts receivable to estimate bad debts. The following aging schedule reflects the situation at year-end:

Estimated

Age Group Uncollectible

Account Age Balance Percentage

Current $159,000 3.0

1-30 days past due 103,000 4.5

31-60 days past due 32,000 10.0

61-90 days past due 13,600 25.0

Over 90 days past due 7,400 40.0

Required:

1. Calculate the amount of the Allowance for Doubtful Accounts that should appear on the December 31, current year, balance sheet. (5 marks)
2. Prepare the journal entry to record bad debts expense for the current year. (2 marks)
3. Show how accounts receivable would appear on the December 31, current year, balance sheet. (3 marks)

Prepare journal entries for requirement #2. Descriptions are not necessary.

GENERAL JOURNAL

Ref #	Account Title	Dr.	Cr.

Question #3: Astro Corporation uses the perpetual inventory system. Information related to Astro's inventory at October 31 is given below: Requirements: 1. Show calculations and determine the ending inventory using the FIFO cost formula at October 31(5 Marks)

2. Show calculations and determine the ending inventory using the weighted average cost formula at October 31.(5 Marks)

3. Determine sales, cost of sales and gross profit under both inventory methods (FIFO and average cost).5 Marks FIFO Weighted Average

Sales
Cost of Sales:
Beginning Inventory
Add: Purchases
Cost of Goods Avail for Sale
Less: ending Inventory
Cost of Sales
Gross Profit

Question 4 : Practical Use of information(10 Marks)

Roots Corporation, or Roots, is a publicly held Canadian brand that sells apparel for women, men children and babies as well as accessories.

Roots was founded in 1973 by Michael Budman and Don Green, two city kids who met at summer camp in Ontario's Algonquin Park. Inspired by the experience of traveling from their city homes into the heart of Canada's wilderness, they created Roots.

Roots provide a broad range of products, including women's and men's apparel, leather goods, footwear, accessories, and kids, toddler and baby apparel.

While the birthplace was a little cabin in Algonquin Park, they inspire the world to experience everyday adventures with comfort and style. They have more than 120 stores across North America, more than 150 internationally, and offer online shipping to over 70 countries.

Required:

Again, go to the Roots website and find the Annual Report for 2022, here is the link:

https://s22.q4cdn.com/148529933/files/doc_financials/2020/ar/Roots-FY-2022-Annual-Report_vf.pdf

A. Refer to the Consolidated Statement of Net Income

1. How is Cost of Goods Calculated - ie what does it include? List the accounts included.(2 Marks)
2. Calculate Gross profit Margin and Net Profit Margin(2 Marks)

b. Refer to the Consolidated Statement of Financial Position (Balance Sheet)

1. Calculate Current Ratio and explain whether it is a healthy ratio?
2. C. discuss if you think Roots' would have a concern over collecting their Accounts Receivable and how they would estimate their Allowance for Doubtful Account
3. 1. describe how inventory is valued(2 Marks)