A) As part of your Source Documents assignments, you were asked to enter several supplier invoices. Amongst those invoices you discovered that several (Dynamic Small Engines, Visa, Stapler Office Supplies) had expenses that were of a personal nature and were not related to the business. When you discussed these invoices with the owner, his response was to thank you for your concern but to be sure to enter those invoices as business expenses, not personal. After all it is my business, and my money.

B) At the end of January, Mr. Cutter made the decision to expand the business and to hire employees to help with the production needs going forward. He also severed ties with Murrays Millwork who worked as a subcontractor for Kent Manufacturing. As you were setting up payroll and creating the employees you were surprised that Mr. Cutter instructed you to put his wife, Mrs. Cutter on the payroll. To your knowledge, Mrs. Cutter has never worked in the business. Upon discussion with Mr. Cutter, he tells you not to worry and that several of his colleagues have put their spouses on the books as a way of splitting income.

C) At the end of February, Mr. Cutter asks you to write cheques for all overdue January supplier invoices, which you have done. However, by doing so the bank is now overdrawn. Mr. Cutter asks you not to mail the cheques other than to Lindsay Hardware and Kawartha Building supplies, both of whom are managed by close friends of his.

D) In March when entering the Visa bill, you notice a rather large charge on the Visa. Mr. Cutter asks you to record this amount in the small tools account. You do so but wonder if this amount should not have been capitalized. You are especially concerned as this is not the first time you have been asked to expense something that you believe should have been capitalized.

E) In assignment #4 you were required to complete a revenue recognition schedule. The revenue to be deferred was significant and material. Mr. Cutter has reviewed the March financials and does not understand why profit was so low. After all, he states, we billed several customers for deposits for new projects. You try to explain that these deposits are not in fact revenue. He responds by saying enough of your fancy accounting talk. Get rid of that unearned revenue entry and show the true profits for my business!

f) Mr. Cutter is just starting to review the budgets that you have prepared for 2021. He is very impressed with your work, but less so with the forecasts. He does not think the bank will support his operational needs let alone his expansion plans. As such, he instructs you to increase the original sales forecast by 5%, and to lower overhead and sg&a costs by 10%. You have run these numbers and note that net income would rise by 82% and total assets by 24%. Mr. Cutter is thrilled with these results and instructs you to make this the final budget that he will present to the bank. You are concerned as other businesses in this industry are generally forecasting sales increases of 5-7% for the next year. KMI is forecasting almost double that.