$1.$ 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 Net Realizable Value

Inventory $-$ Raw ingredients $$9,200$ $$10,400$

Inventory $-$ Finished goods $$10,300$ $$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:

Date of purchase Depreciation method

Land January $1,2020$

Buildings January $1,2020$ 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$

$6.$ 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 non$-$

corporate receivables might not be collected.

$9.$ TBCS has a monthly payroll of $$14,000$ and pays its employees on the $15$th of every month

for work done in the previous month. The payroll needs to be considered in preparing year$-$

end 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.

 

Exhibit 1 Tiffany Bakery and Catering Services (TBCS) Account name Cash AR Supplies Unadjusted Trial Balance December 31, 2023 Debit CAD$ Credit CAD$ 36,400 58,800 4,550 Inventory 19,500 Prepaid Insurance 7,200 Land 950,000 Buildings 305,000 Accumulated Depreciation - Buildings 45,750 Furniture 36,000 Accumulated Depreciation - Furniture 7,200 Machinery 27,000 Accumulated Depreciation - Machinery 1,620 Computer 3,500 Accounts Payable 25,600 Deferred Revenue 80,000 Bank Loan Payable, due in 2026 750,000 Contributed Capital 75,800 Retained Earnings (January 1, 2023) 206,280 Service Revenue 358,000 Sales Revenue 301,000 Cost of Sales Salaries Expense Utilities Expense 229,800 154,000 16,500 Marketing Expense Total 3,000 $1,851,250 $1,851,250