Journal entries, statement of earnings, Professional memo

Hello, I have a case assignment. It requires Preparing journal entries. Classified Statement of Earnings, Statement of Retained Earnings, and classified Statement of Financial Position. And preparing a professional memo.

This assignment is going to be checked for plagiarism by the teacher so please make sure there isn’t any.

Case Assignment
AFA100 Introductory Financial Accounting, Winter 2024
D2L file submission (financial statements & memo) is due on April 5, 2024 at 11:59 pm.
Instructions:
1. This assignment is to be completed on an individual basis; group work is NOT permitted.
2. Prepare the financial statements (Excel) and memo (Word) required and upload them
in to D2L under “Assignments”. Include your journal entries on a separate tab in the
same Excel file as the financial statements. Therefore, you will be uploading only 2
files: 1 Excel and 1 Word.
3. To submit the financial statements and memo, go to “Assessment” in the top D2L menu
bar and then “Assignments”. Click on the “Case Assignment Submission” link to submit.
4. Your financial statements and memo will be checked for plagiarism and manually
graded and returned to you.
5. Round numbers to the nearest whole amount (e.g., round $125.43 to $125).
Round ratios/percentages to the nearest whole percent (e.g., round 12.58% to 13%).
6. The instructor will not answer any questions pertaining to the content of the case
assignment prior the deadline.
7. Do not wait until the last minute to complete and submit. Please recognize the fact
that you may have technical difficulties or other unexpected items when attempting to
submit the assignment. There is no extra time beyond the stated deadline for technical
issues experienced.
Copyright © Dongning Yu 2024 AFA100 Winter 2024 Case Assignment
1
Tiffany Bakery and Catering Services (TBCS)
Founded in 2017 by Tiffany Xu in the kitchen of her house, Tiffany Bakery and Catering Services
(TBCS) quickly grew into one of the preferred event planning and catering businesses in North
York, ON. TBCS offers unique event experiences that fulfill the dynamic needs of the clients.
During COVID-19 lockdowns, TBCS switched its strategy and started to offer pre-packed meals
with pickup options. Tiffany, the owner and head chef, was grateful that her business was able
to come out of the pandemic with a more reliable catering company than before.
Tiffany has asked you to create a set of financial statements for the year of 2023, excluding the
statement of cash flows, as she feels she has a good understanding of her cash spending as
compared to her budget. Tiffany will use these statements for her own use to assist with
planning for the future of the company. The company’s year-end is December 31.
Exhibit 1 includes an unadjusted trial balance at December 31, 2023.
Exhibit 2 includes information on 2023 transactions which require analysis and recording using
Accounting Standards for Private Enterprises (ASPE).
Copyright © Dongning Yu 2024 AFA100 Winter 2024 Case Assignment
2
Required:
1. Prepare the journal entries required for 2023, including any year-end adjusting entries.
Provide an explanation of why each entry is required and how it was calculated (you can
show your calculation in the Excel spreadsheet). The company prepares annual adjusting
entries.
2. Prepare the classified Statement of Earnings, Statement of Retained Earnings, and
classified Statement of Financial Position, for the period ended and as at December 31,
2023.
3. Prepare a professional memo to Tiffany Xu outlining 2 internal control weaknesses.
Include an explanation of what can go wrong as a result of each weakness, and
recommended changes.
• Use the format provided below.
• Consult the course textbook page 331-338 for guidance on internal controls.
• See page 4 below for internal control guidance.
Required Memo Format:
TO:
FROM:
DATE:
RE:
Internal Control weakness 1
Description of weakness
Explanation of what can go wrong as a result of the weakness
Recommended change
Internal Control weakness 2
Description of weakness
Explanation of what can go wrong as a result of the weakness
Recommended change
Prepare the financial statements (Excel) and memo (Word) required and upload them in to
D2L under “Assignments”. Include your journal entries on a separate tab in the same Excel file
as the financial statements. Therefore, you will be uploading only 2 files: 1 Excel and 1 Word.
Copyright © Dongning Yu 2024 AFA100 Winter 2024 Case Assignment
3
Consult the course textbook page 267-275 for guidance on internal control.
What are control weaknesses?
Control weaknesses may relate to the control of cash or any other assets that a company has.
Companies should have internal controls in place to protect their assets. Controls may also
relate to processes and procedures of a company. When internal controls are missing or weak,
a company is said to have an “internal control weakness”.
Example of internal control weakness for a toy manufacturer:
Description of weakness: The back door to the company’s warehouse where inventory is
stored is kept open and unlocked throughout the day, every day.
Explanation of what can go wrong as a result of the weakness: Outsiders/unauthorized people
can get into the warehouse and steal inventory
Recommended change: Ensure the back door is kept locked at all times and provide entry only
to authorized people such as employees and delivery personnel.
Example of internal control weakness for a farming business:
Description of weakness: Farm employees are allowed one free bucket of strawberries per
week during strawberry season. Employees can pick strawberries from the field and fill a bucket
themselves.
Explanation of what can go wrong as a result of the weakness: Farm employees may take
more strawberries than only one bucket a week which will result in the farm giving away more
free strawberries than it intended and this will reduce profit for the business.
Recommended change: Implement a system that farm employees must sign off a master list
when they have taken their one free bucket of strawberries a week. A manager should monitor
the list as well as watch for employees who appear to be taking a bucket of strawberries when
they have already signed off on the master list and should be reprimanded if found doing so.
You may be able to think of alternate implications and recommendations for the internal
control weaknesses above; that’s fine as there is not only one right answer.
There are several control weaknesses in this case. Find any 2 and use the same format as
above to explain each one separately.
Copyright © Dongning Yu 2024 AFA100 Winter 2024 Case Assignment
4
Exhibit 1
Tiffany Bakery and Catering Services (TBCS)
Unadjusted Trial Balance
December 31, 2023
Account name
Cash
AR
Supplies
Inventory
Prepaid Insurance
Land
Buildings
Accumulated Depreciation – Buildings
Furniture
Accumulated Depreciation – Furniture
Machinery
Accumulated Depreciation – Machinery
Computer
Accounts Payable
Deferred Revenue
Bank Loan Payable, due in 2026
Contributed Capital
Retained Earnings (January 1, 2023)
Service Revenue
Sales Revenue
Cost of Sales
Salaries Expense
Utilities Expense
Marketing Expense
Total
Debit CAD$
36,400
58,800
4,550
19,500
7,200
950,000
305,000
Credit CAD$
45,750
36,000
7,200
27,000
1,620
3,500
25,600
80,000
750,000
75,800
206,280
358,000
301,000
229,800
154,000
16,500
3,000
$1,851,250
Copyright © Dongning Yu 2024 AFA100 Winter 2024 Case Assignment
$1,851,250
5
Exhibit 2
Additional information
1. An annual insurance policy was purchased on October 1, 2023, effective the same day, for
$7,200 cash.
2. A count of supplies was done on December 31, 2023, where $1,340 worth of supplies was
found on hand.
3. TBCS uses a perpetual inventory system to account for inventory. Below is a breakdown of
inventory on hand at December 31, 2023:
Cost
$9,200
$10,300
Inventory – Raw ingredients
Inventory – Finished goods
Net Realizable Value
$10,400
$9,700
4. The company ran out of cake and pastry flour, which is a key ingredient. They placed an
order for 50 bags of the flour at a cost of $25 each on December 28, 2023. Terms of this
order were 2/10, n/30, FOB shipping point. The company received an email notifying them
of shipment on December 31, 2023, and it generally takes 5 businesses days to deliver.
Tiffany looked forward to replenishing stocks and adding them to inventory upon receipt.
5. TBCS has the following long-lived assets:
Land
Date of purchase
January 1, 2020
Buildings
January 1, 2020
Depreciation method
Straight-line
Estimated useful life 20 years
Furniture January 1, 2022
Double-declining balance
Estimated useful life 10 years
Residual value $400
Machinery July 31, 2022
Units-of-production
Estimated to be able to produce 10,000 units in total
Produced 900 units in 2023
Computer September 30, 2023 Straight-line
Estimated useful life 5 years
Residual value $500
Copyright © Dongning Yu 2024 AFA100 Winter 2024 Case Assignment
6
6. Customers must pay a $1,000 non-refundable booking deposit for a catering package
provided by TBCS. An analysis of bookings during 2023 indicated that 80 deposits were
received and credited to Deferred Revenue. By December 31, 2023, TBCS had provided the
catering service and completed 65 of the 80 bookings but had not recorded anything yet.
Cash received from all the sales is counted daily and is deposited in the company’s bank
account at the end of each month. Bank reconciliations are prepared on an annual basis.
7. A local business made an advance payment of $3,500 to TBCS on December 15, 2023 for an
event to be held in March 2024. This amount was credited to Service Revenue at the time of
receipt.
8. TBCS delivered meals worth $1,800 to a customer in October 2023, but has not received the
payment and all methods of contacting the customer have been exhausted and the amount
has been deemed uncollectible.
Tiffany has reviewed the accounts receivable balance and notes that 60% of accounts
receivable balance relates to corporate events, and the rest relates to non-corporate
events. Normally TBCS collects all of its outstanding receivables. Due to the unusual
economic conditions during the year, Tiffany fears this year might be different. She
estimates that 10% of corporate receivables might not be collected and 15% of noncorporate receivables might not be collected.
9. TBCS has a monthly payroll of $14,000 and pays its employees on the 15th of every month
for work done in the previous month. The payroll needs to be considered in preparing yearend financial statements.
10. The December 2023 utility bill of $1,650 has not yet been recorded nor paid.
11. TBCS is subject to income tax and the tax rate is 20%.
12. Tiffany hired a payroll clerk, who is a very hard worker and did not take vacation in 2023.
Employees do not typically report payroll errors, so Tiffany does not monitor the payroll
clerk closely.
Copyright © Dongning Yu 2024 AFA100 Winter 2024 Case Assignment
7