Alfie Ltd. is a gourmet cake shop in a local suburb that makes and sells a range of delicious cakes and pies to dine in and take away customers and also to arrange of wholesale customers throughout Melbourne and the surfcoast. The owners of the business have approached you for some help in preparing its year-end financial reports for the business. To you assist you, they have provided the following information: CR $ 753,250 6,125 43,750 Alfie Ltd Trial Balance for the period ending 30 June 2020 DR Account $ Accounts payable 170,700 GST payable 4,500 Accum. Depreciation: Building (bal 30/12/2019) Cash and Cash equivalents 14,500 Building (cost) 1,721,800 Wages and Salaries 1,056,678 Dividends (paid in cash during the year) 140,500 Equipment (cost) 691,500 Sales returns Supplies on hand Interest expense (incurred & paid during the year) 44,063 Inventory 55,250 Land (cost) 908,250 Intangible assets (cost) Cost of Goods Sold 2,643,312 Notes payable Accum. Depreciation: Equipment (bal 30/06/2019) Prepayments (current) 99,513 Contributed equity ($1 per share) 1,750,000 Rent expense 58,500 Accounts receivable 247,750 Retained earnings (bal 30/06/2019) Sales Other expenses (including depreciation) 369,000 Provision for Doubtful debts 9,975,816 625,000 1,175,000 230,605 120,450 4,499,163 21,823 7,475,166 The company also provides some additional information. Some of that provided below has been recorded in the above trial balance, while some has not. Also, be aware that there is some reason to doubt the quality of the bookkeeper the company uses to prepare the trial balance. Buildings are depreciated on a straight-line basis over a period of 40 years; Equipment is depreciated at the rate of 20% annually using the reducing balance method over a 10 year period. The company estimates the depreciable value of buildings will be 80% of cost, while it expects to be able to sell the equipment as scrap for $50,000 at the end of its useful life. All interest incurred during the year on the Note Payable (5%) has been properly recorded, with the exception of the final three months' interest which has been incurred and remains unrecorded at year end; Year end count reveals that supplies on hand valued at $42,411; The company tax rate is 30% of profit; The company advises that $41,971 of prepayments related to various expense items which were incurred/used prior to year-end; A count of inventory on hand revealed an amount of $57,975 at year-end; The business declared a final dividend of $38,000 during May, but has not recorded this amount as it will not be paid until September 2020 - in the form of additional shares; The notes payable are to be repaid gradually over the term of the loan (8 years); A current debtor who owes the company $9,670 has gone into liquidation and the company concludes this amount will not be recovered. Further, the company advises that they have completed an aged debtors analysis and based on this analysis, they conclude that the year-end balance of the provision for doubtful debts should be 6 per cent of the final balance of accounts receivable. REQUIRED: (a) (b) (c) (d) (e) Using the information provided by the company, prepare a corrected trial balance, showing the accounts listed in the appropriate way. (3 marks) Prepare properly labeled journal entries to record ALL adjustments required in preparing the financial statements. In performing any calculations, where appropriate round to the nearest dollar. Include brief narrations (10 marks) Prepare an appropriately formatted Income Statement for the year ending June 30, 2020 for Alfie Ltd. In doing so, include all information and elements of formatting (including subheadings) you would typically see on the face of such reports (no note disclosures are required). (10 marks) Prepare an appropriately formatted Balance Sheet as at June 30 for Alfie Ltd. In doing so, include all information and elements of formatting (including subheadings) you would typically see on the face of such reports (no note disclosures are required). (12 marks) The emergence of the COVID19 has meant that 2020 has been extremely challenging for many businesses, and devastating for others. There is no doubt that the financial performance and financial position of businesses have been deeply affected. Required: Discuss briefly the likely effect of COVID 19 on the financial performance and financial position of business such as Alfie Ltd. in 2020 and beyond. In doing so, use examples from the financial statements for Alfie Ltd. to illustrate your views. (10 marks) Discuss the following statements: The role of financial statements is to report the true financial performance and position of the business. This is how the financial statements derive their usefulness for decision making. Financial reporting is just story telling with data. This is why financial statements are useful for decisions You should compare and contrast the statements. If you feel one statement better captures the essence and usefulness of financial reporting, you should reflect this in your argument. (15 marks) (1