Chris referred Botanical Nurseries Inc. (BNI) to your firm following the retirement of its accountant. BNI operates several garden centers in Saskatchewan. Given the seasonal nature of its business, BNI also has physical and online stores from which it sells home dcor. BNI's financial statements are prepared in accordance with IFRS. Gloria Paynter, BNI's general manager, has asked for assistance with the following transactions: On April 1, 2021, BNI purchased inventory with a cost $204,000, signing a 1 year note payable to the supplier. Interest is charged on the note at a rate of 3% per annum and is due monthly with the first interest payment due May 1. The supplier required that the GST of 5% and PST of 6% of the purchase price be paid in cash. BNI has a PERPETUAL inventory system. On April 15, BNI remitted CPP of $2,453, EI of $1,706 and employee income taxes of $10,688 to the Receiver General for January 1 to March 31. The CPP and El amounts include the employee withholdings and BNIs required contributions. Gloria has requested that you prepare the journal entries (in good form) for April 1 to 30, inclusive ONLY. You plan to date the journal entries, provide detailed supporting calculations and round all amounts to the nearest dollar (8 marks). (Please insert response here.) Gloria also forwarded an email regarding a lawsuit filed against BNI. After Regina's recent heavy snowfall, a delivery arrived at the Regina garden center before the loading dock had been cleared of snow and ice. While unloading the truck, the driver slipped and suffered a broken elbow. The driver, unable to work for several months while he recovers, has sued BNI for lost wages, pain and suffering. According to BNI's lawyer, there is a 60% chance that BNI will be found liable for damages ranging from $20,000 to $80,000 with $55,000 being the most likely amount. Gloria has requested that you provide a DEFINITIVE recommendation regarding whether or not to recognize the lawsuit in BNI's financial statements AND, if recognized, the amount at which it should be recognized based on a COMPLETE discussion of the guidance provided in the CPA Canada Handbook. She does NOT expect any journal entries at this time (4 marks). (Please insert response here.) Chris referred Botanical Nurseries Inc. (BNI) to your firm following the retirement of its accountant. BNI operates several garden centers in Saskatchewan. Given the seasonal nature of its business, BNI also has physical and online stores from which it sells home dcor. BNI's financial statements are prepared in accordance with IFRS. Gloria Paynter, BNI's general manager, has asked for assistance with the following transactions: On April 1, 2021, BNI purchased inventory with a cost $204,000, signing a 1 year note payable to the supplier. Interest is charged on the note at a rate of 3% per annum and is due monthly with the first interest payment due May 1. The supplier required that the GST of 5% and PST of 6% of the purchase price be paid in cash. BNI has a PERPETUAL inventory system. On April 15, BNI remitted CPP of $2,453, EI of $1,706 and employee income taxes of $10,688 to the Receiver General for January 1 to March 31. The CPP and El amounts include the employee withholdings and BNIs required contributions. Gloria has requested that you prepare the journal entries (in good form) for April 1 to 30, inclusive ONLY. You plan to date the journal entries, provide detailed supporting calculations and round all amounts to the nearest dollar (8 marks). (Please insert response here.) Gloria also forwarded an email regarding a lawsuit filed against BNI. After Regina's recent heavy snowfall, a delivery arrived at the Regina garden center before the loading dock had been cleared of snow and ice. While unloading the truck, the driver slipped and suffered a broken elbow. The driver, unable to work for several months while he recovers, has sued BNI for lost wages, pain and suffering. According to BNI's lawyer, there is a 60% chance that BNI will be found liable for damages ranging from $20,000 to $80,000 with $55,000 being the most likely amount. Gloria has requested that you provide a DEFINITIVE recommendation regarding whether or not to recognize the lawsuit in BNI's financial statements AND, if recognized, the amount at which it should be recognized based on a COMPLETE discussion of the guidance provided in the CPA Canada Handbook. She does NOT expect any journal entries at this time (4 marks). (Please insert response here.)
