Any help in this would be greatly appreciated. This question has multiple parts, but I slimmed it down to the first question. The adjustments and an explanation for its rationale.

Background

Cathy Thomas is the controller of a medium sized division of a Fortune 500 publicly traded company. The company has a December 31 year end and the auditors will be there to perform the audit beginning January 28th. Prior to appointment to her current position approximately two years ago, Cathy worked for the corporate accounting staff at headquarters. The company has a reputation for promoting its outstanding performers while marginal performers are