Question #3 Part of this course involves being able to visualize and complete the accounting cycle....

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Question #3 Part of this course involves being able to visualize and complete the accounting cycle. This first question challenges you in this regard. You may need to review your Introductory Accounting textbook/notes. The process, logic and terminology associated with the accounting cycle will be used regularly throughout this course so it is important to not only complete this question but also to understand what is happening. You are the accountant with Udder Delights Inc. (UD) which is a company that sells cheese. The business is owned and operated by Humphry Bovine. Humphry has been so busy that he hasn't had any time to complete his Financial Statements as of and for the 11 months ended November 30, 2019. Humphry's bank manager has threatened to cancel Udder Delight's bank loan (due two years from now) if he does not receive an Income Statement showing the company's gross profit and net income by next week. Humphry started to make adjustments and corrections but simply ran out of time. He assembled the attached worksheet and handed you the following information he thought you might need. (a) No depreciation has been recorded on the business vehicle. It was purchased on January 1, 2019 at a cost of $25,000. He plans to use the vehicle for 4 years at which time the resale value is estimated to be $3,000. Use straight-line depreciation. (b) An inventory count indicated $56,000 of inventory at November 30, 2019. Udder Delight's uses a perpetual inventory system. (c) Udder Delights recently signed an agreement with the "Charley the Cheese" Store to supply them with Ticklemore and Wookey Hole cheese. The contract is worth $100,000 and deliveries will commence in February 2020. Udder Delight's received and cashed a $20,000 cheque from the store in November 2019 in respect of this contract. The cash receipt was recorded as part of sales revenue. (d) A total of four months remains on Udder Delight's fire insurance policy. The $3,000 annual policy was paid on April 1, 2019 and was fully expensed at that time. (e) On June 1, 2019 Udder Delights lent a long-time employee $15,000. She signed a promissory note agreeing to repay the amount on May 31, 2022. The interest rate is 6% per year with interest payable every May 31. The note has been recorded on the balance sheet but no interest has been recorded. (f) Rent of $4,000 per month has not been paid or recorded for the last two months. Question #3 Part of this course involves being able to visualize and complete the accounting cycle. This first question challenges you in this regard. You may need to review your Introductory Accounting textbook/notes. The process, logic and terminology associated with the accounting cycle will be used regularly throughout this course so it is important to not only complete this question but also to understand what is happening. You are the accountant with Udder Delights Inc. (UD) which is a company that sells cheese. The business is owned and operated by Humphry Bovine. Humphry has been so busy that he hasn't had any time to complete his Financial Statements as of and for the 11 months ended November 30, 2019. Humphry's bank manager has threatened to cancel Udder Delight's bank loan (due two years from now) if he does not receive an Income Statement showing the company's gross profit and net income by next week. Humphry started to make adjustments and corrections but simply ran out of time. He assembled the attached worksheet and handed you the following information he thought you might need. (a) No depreciation has been recorded on the business vehicle. It was purchased on January 1, 2019 at a cost of $25,000. He plans to use the vehicle for 4 years at which time the resale value is estimated to be $3,000. Use straight-line depreciation. (b) An inventory count indicated $56,000 of inventory at November 30, 2019. Udder Delight's uses a perpetual inventory system. (c) Udder Delights recently signed an agreement with the "Charley the Cheese" Store to supply them with Ticklemore and Wookey Hole cheese. The contract is worth $100,000 and deliveries will commence in February 2020. Udder Delight's received and cashed a $20,000 cheque from the store in November 2019 in respect of this contract. The cash receipt was recorded as part of sales revenue. (d) A total of four months remains on Udder Delight's fire insurance policy. The $3,000 annual policy was paid on April 1, 2019 and was fully expensed at that time. (e) On June 1, 2019 Udder Delights lent a long-time employee $15,000. She signed a promissory note agreeing to repay the amount on May 31, 2022. The interest rate is 6% per year with interest payable every May 31. The note has been recorded on the balance sheet but no interest has been recorded. (f) Rent of $4,000 per month has not been paid or recorded for the last two months.