In May 20X1, a group of outdoor enthusiasts formed Wild Ones Limited (Wild Ones). Wild Ones operates in central Newfoundland and is involved in a variety of outdoor adventure activities. Start- up capital was provided from an inheritance that one of the owners had received and modest savings of the other owners. For the first eight months of operations, co- op students looked after basic financial record keeping. An unaudited balance sheet as of 31 December 20X1 is presented in Exhibit 1.

It is now 24 January 20X2, and you, a Professional Accountant, have just been hired by Wild Ones on a part- time basis to take on financial accounting responsibilities for the com-pany’s first fiscal year- end of 30 April 20X2. During its first year of operations, Wild Ones secured financing from the Regal Bank and the Atlantic Canada Opportunities Agency ( ACOA), details of which are contained Exhibit 2. The terms of these lending agreements require Wild Ones to prepare its financial statements in accordance with Accounting Stan-dards for Private Enterprises (ASPE) and to have audited financial statements. The firm of Jake and Malachy, public accountants, will be completing the audit of Wild One’s financial statements. Wild One’s owners explain that they want you to analyze the information presented and then:

• Explain the changes you believe are required;

• Prepare any necessary 31 December 20X1 adjusting journal entries; and

• Prepare a revised balance sheet.

Required: 

Prepare a report that addresses the requests of the owners.