Westcorp $($WC$)$ is a mid$-$sized residential construction firm located in the Okanagan Valley of British Columbia which was founded in the early $2000$s$.$ While WC started out as a small family firm, it has grown rapidly over the past six years and now has approximately $140$ employees at any one time. WC has two divisions, one which does multi$-$family building construction including townhouses and apartment buildings. The other division does residential renovation jobs for individual customers and has specialized in upscale kitchens and bathrooms. Because WC management believes that may take the company public in the future, financial statements are prepared using International Financial Reporting Standards.

WC has never had a proper controller on staff before and just used a series of bookkeepers to prepare their internal financial information. They would then rely on their external accountant, Sherry Mann, CPA, to do numerous adjustments to the internal financial information during the preparation of WC$$s year$-$ end review engagement and corporate tax return. WC management came to realize that it$$s much more cost effective to hire a qualified accountant to prepare the internal financial information to reduce the work required from Sherry.

Today is October $14,2023$ and after a series of interviews you $($CPA$)$ were hired as the new controller for WC$.$ You have just finished your orientation and have gotten access to the accounting system. After a quick review of recent transactions you begin a meeting with Janet Jones, WC$$s Chief Executive Officer and Lloyd Jones, WC$$s Chief Operating Officer.

Janet: Welcome to the team CPA! We$$re happy to have you on board with WC$,$ especially in this very busy and consequential time for the company. We$$ve made some very big decisions recently and we think some of them may impact our financial statements for the September $30,2023$ fiscal year end.

Lloyd: Janet is right, after much soul searching we made the decision to sell our renovation division. The board of directors approved the sale process at the end of July $2023$ at their monthly meeting and the division was ready to be sold as of that date. After moving so significantly into multi$-$family construction the renovation division occupies an amount of management resources that cannot be justified for the thin margins. We are also having difficulty collecting some of our receivables from customers of our renovation division which was the final nail in the coffin. Here$$s a document with information on that division you may find helpful $($Appendix I$).$ After making a few phone calls to our contacts, we believe that we$$ve found a buyer for the division. It$$s a renovation company from Alberta that wishes to expand into the Okanagan Valley. They$$re looking to have the acquisition done by the beginning of summer $2024.$ Because we want the division gone, we$$re not necessarily looking to maximize the potential return for the assets and operations.

Janet: Speaking of receivables, we have always used the percentage of receivables method for estimating our allowance for doubtful accounts. We use a $3\%$ rate for the construction division and a $12\%$ rate for the renovation division. We would like to continue with that process for the $2023$ fiscal year as well and required information can be found in Appendix II$.$

Lloyd: As you may know, Janet and I own another company. We moved the bookkeeper that was working for WC to that company in preparation for your start date. Before he was moved, we asked him to prepare a list of outstanding items that he was unsure on how to deal with. I$$ve got that list here for you $($Appendix III$).$ I$$ve also got WC$$s statement of financial position from last year here $($Appendix IV$)$ and WC$$s unadjusted trial balance as at September $30,2023$ here $($Appendix V$).$

$$ Graham Moir, $2023$

BUAD $263$ Case Project Winter $2024$

Janet: Let us know if you have any questions and good luck! Required:

$1.$ Prepare a memo to Janet and Lloyd with the justification for any adjustments required to the draft trial balance.

$2.$ Complete the Excel worksheet showing the opening trial balance, adjustments to each account and final trial balance after adjustments.

$3.$ Prepare a set of financial statements in good form which incorporate all adjustments required including a statement of comprehensive income, statement of changes in equity and statement of financial position. Sherry will take care of the statement of cash flows using an automated process.

Responses must be in Arial $12$pt font, normal margins and no longer than $6$ pages

$$ Graham Moir, $2023$

BUAD $263$ Case Project Winter $2024$

Appendix I

Renovation Division Financial Information

Notes:

$$ The renovation division uses straight$-$line depreciation. A full year of depreciation was recorded already for fiscal $2023.$

$$ It was confirmed with management of the division that there are no other balances related to the renovation division for the $2023$ fiscal year.

$$ We are confident that this division will be sold at a