You are the chief financial officer of SweetChoco Ltd., a public Canadian company, with fiscal year end
Question:
You are the chief financial officer of SweetChoco Ltd., a public Canadian company, with fiscal year end on December 31. For the year 2014, you have the following unadjusted trial balance and the following information that you must consider before presenting the financial statements to the Board of Directors for approval.
Additional information:
(1) No depreciation has been recorded for 2014. The company’s buildings are recognized using the cost model, depreciated on a straight-line basis with no residual value, and were acquired on January 1st, 2009.
(2) On June 1, 2014, the company paid $3,600 in advance for 18 months of rent in its new office space. The whole amount was expensed.
(3) At the board meeting on December 20, 2014, the directors decided that in early February 2015 the company will distribute dividends of $0.03 per common share. You know that the company has 200,000 common shares outstanding.
(4) On December 10, 2014, the company recorded $3,250 in revenue from a shipment of black chocolate. As at December 31, 2014, the black chocolate had not yet left the warehouse.
(5) The management estimates that $255 of Accounts Receivable will be uncollectible.
(6) The company has a professional subscription to two magazines. On March 1, 2012, the company paid $4,050 for a 3-year subscription to The World of Chocolate. On August 31, 2014, the company paid $2,400 for a 2-year subscription to the Chocolate Review magazine.
(7) You remember that the junior accountant had sent you an e-mail telling you that on December 15, 2014, he incorrectly recorded an invoice for $110 from the company’s advertising and marketing partner as Delivery and Transport expense.
(8) The loan from the bank was obtained on December 1st, 2014, at an interest rate of 12%. The loan will be repaid in annual equal installments of $2,000, the first of which will be made on November 30, 2015.
Required:
Prepare the adjusting and correcting entries.
Investment Analysis and Portfolio Management
ISBN: 978-0538482387
10th Edition
Authors: Frank K. Reilly, Keith C. Brown