You recently accepted the controller position for Java the Hut, a regional coffee chain.

• The owner informs you that a complete financial statement package will be required for a new bank loan package.
• Prior to your arrival, the company had one accountant and relied heavily on the auditors in the preparation of financial statements.  With the new controller position, the expectation is that you will assume the preparation of financial statements.
• On your first day of work on April 1, 2012, the Java the Hut accountant informs you that there were a number of transactions in the first quarter of 2012 that she was unsure of the appropriate accounting. Consequently, she recorded the cash activity in Other Assets – Holding account as a temporary holding account.  The good news is that the Java the Hut accountant maintained excellent detail of the various transactions and has a series of supporting schedules for you.

Project Requirements

1. Prepare the appropriate journal entries to recognize the first quarter transactions, currently reported in Other Assets – Holding in the balance sheet.

2. Prepare consolidating worksheets for the income statement for the first quarter of 2012, the retained earnings for the first quarter of 2012, for the balance sheet as of March 31, 2012, and the cash flow statement for the first quarter of 2012.

• Adjusting entries from 1 above should be reflected in the appropriate company general ledger.
• All inter-company transactions and balances should be eliminated.
• Consolidating worksheets should utilize Excel.
• Calculations supporting eliminations should be included.

3. Prepare consolidated financial statements for the bank reporting, including:

• Income Statement for the first quarter of 2012 (Multi-Step Format)
• Balance Sheet as of March 31, 2012 (Classified Format)
• Statement of Retained Earnings as of March 31, 2012.
• Statement of Cash Flows for the first quarter of 2012.
• Financial Statements should utilize Excel.

Schedules                                 Attached

Schedule 1                          Other assets - holding analysis

Schedule 2                          Trial Balance of New Castle Coffee as of 01/01/12.

Schedule 2A                        New Castle Coffee Acquisition Support.

Schedule 3                          Trial Balance of New Castle Coffee as of 03/31/12.

Schedule 4                          Trial Balance of Java the Hut as of 12/31/11.

Schedule 5                          Trial Balance of Java the Hut as of 03/31/12.

Schedule 6                          Intercompany Transactions – first quarter 2012.

Answer rating: 100% (QA)

1 The journal entries to recognize the first quarter transactions currently reported in Other Assets Holding in the balance sheet will depend on the n... View the full answer