TFD, Inc. recently applied for a loan from BNB Credit Union . The large loan received considerable scrutiny, but based on the recommendation of the loan officer and the bank manager it looked like BNB was going to approve the loan. Unfortunately, the day before the loan was to be approved, TFD's owner discovered some mistakes in the financial records. She has asked you to help her find and correct any mistakes as quickly as possible so that they can send the updated financial statements to the credit union before a final decision is made.

After careful review, you have determined the following issues need to be corrected:

1. lease on a new set of equipment was inappropriately recorded as a debit to rent expense and credit to cash. The lease was signed at the beginning of 2022 and requires annual payments made at the beginning of each period.

The market value of the leased asset was $1,336,000 and it had an estimated useful life of 5years with no salvage value. The lease is for 3 years with annual payments of $183,456. TFD's marginal borrowing rate is 5.

2. customer paid $180,000 for a special order on 9/22/2022. The cash receipt was appropriately recorded (debit to cash and credit to unearned revenue), but no entry was made on 12/31/2022 when the order was shipped. The inventory cost $140,400 to produce.

3. Members of the sales force are paid commissions twice a year. Commissions on sales fromJanuary - June are paid on July 10th and commissions from July - December are paid onJanuary 10th. No entry has been made for the commissions earned during the last half of2022. Total sales from July to December were $3,439,800, but only 25.% of those sales were subject to the 7.5% commission. Commissions are reported with Sales Force Salaries.

Answer rating: 100% (QA)

Answer To correct the identified issues in TFD Incs financial records lets address each one individu... View the full answer