Company has prepared the following financial statements:

Company. has hired you (an outside consultant) to review the financial statements and make any necessary corrections/adjustments before the financial statements are presented to the board of directors. The President of the Company, Mr. Turnkey has provided the following information to help you adjust the financial statements.

1. Inventory is costed using the average cost method. Inventory at December 31, 2016 was comprised of: 3,000 units at an average cost of $12.00 per unit. 2017 purchases included:

2/27/2017: 800 units @ $10.00 per unit

5/3/17: 500 units @$10.50 per unit

6/25/17: 600 units @ $9.75 per unit

9/28/17: 700 units @ $10.25 per unit

12/2/17: 400 units @ $11.00 per unit 4,000 units were sold in 2017. (ROUND ALL AVERAGE COST INFORMATION TO TWO DECIMAL PLACES)

(2) Equipment includes two assets.

a. Asset #1 was purchased on March 1, 2017 for a cost of $40,000. This asset has a salvage value of $5,020 and an expected useful life of 5 years. The asset is depreciated using the straight-line method.

b. Asset #2 was purchased on December 1, 2017 for a cost of $65,000. This asset has a salvage value of $2,000 and an expected useful life of 3 years. The asset is depreciated using the straight-line method.

(3) Accounts receivable detail is as follows:

The allowance for doubtful accounts is based on the aging of accounts receivable method. The estimated percentage of uncollectible amounts is as follows:

Current amounts (not yet due) = 1%

1 - 30 days past due = 3%

31 60 days past due = 5%

Over 60 days past due = 8%

There were no write-offs during the year. Invoices are billed at net 30 days.

(4) There were two loans with activity during 2017.

a. Note amount #1, $30,000. Annual interest rate of 5%. Interest was accrued monthly. Loan date: September 1, 2012. The loan and all accrued loan interest was paid off on September 1, 2017.

b. Note amount #2, $50,000. Annual interest rate of 6%. Interest is accrued monthly. Loan date: April 1, 2017. The loan is due on May 1, 2022. Accrued interest will be paid annually on January 1 with the final payment due on May 1, 2022.

(5) It has been discovered that $6,000 of product that was paid for and was to be shipped on December 27, 2017 has not been shipped. The product was actually shipped on January 2, 2018.

(6) A physical count of supplies at the end of the year reflected $5,000 of supplies on hand at December 31, 2017.

(7) Total rent for the year should reflect 12 payments of $5,000 per month. Prepaid rent is included in the Prepaid Expenses account.

(8) The Corporate net income tax rate is 15%.

Requirements: PLEASE SHOW ALL WORK ON YOUR TABS USE EXCEL FORMULAS

(1) Show a trial balance spreadsheet for the year ended December 31, 2017. You should use the accounts included on the preliminary financial statements provided above. All necessary accounts are included on the preliminary financial statements.

(2) Record the adjustments required based on the eight items of information presented above. Use the numbers above as a reference number on your trial balance spreadsheet. Be sure to include all calculations used to determine adjustment amounts. These calculations should be made on separate sheets (tabs) in your one Excel file. You should have six tabs when you are finished your case study trial balance spreadsheet and financial statements including ratios (on one tab), inventory, depreciation, accounts receivable, notes payable, memo.

(3) Using your adjusted trial balance, prepare a properly formatted income statement, balance sheet, and statement of stockholders equity for the calendar year 2017.

(4) Show a memo to Mr. Turnkey detailing what problems you found on his preliminary financial statements. In addition to the issues with the preliminary financial statement, provide Mr. Turnkey with: current ratio, working capital, net profit margin, receivable turnover ratio, average collection period, inventory turnover ratio, average days to sell inventory. Round your ratios to two decimal places. Additional information to assist you with your memo is:

a. Average net profit margin for Companys competitors is 20.00%.

b. Accounts receivable at 12/31/2016, $60,000

c. Product inventory at 12/31/2016, $18,000

JKS Goods, Inc. Income Statement For the Year Ended December 31, 2017 Revenue Deferred revenue Product sales Total revenue $ $ $ 25,000 300,000 325,000 Cost of goods sold $ 11,660 Contribution margin $ 313,340 Operating expenses Salaries expense Payroll tax expense Rent expense Bad Debt Expense Supplies expense Depreciation expense Interest Expense Pretax income Income tax expense Net income $ $ $ $ $ $ $ $ $ $ 90,000 9,585 65,000 2,000 22,000 28,000 4,000 92,755 13,913 78,842 Earnings per Share $ 5.26 JKS Goods, Inc. Statement of Stockholders' Equity As of December 31, 2017 Common Stock Shares Amount 15,000 $ 30,000 Additional Paid- in Capital $ 3,500 $ 1,000 Retained Earnings $ 31,020 Balance as of January 1, 2017 Treasury stock, re-sold Cash dividends Net Income Balance as of December 31, 2017 Total Treasury Stock Stockholders' Shares Amount Equity (6,000) $ (13,500) $ 51,020 500 $ 1,125 $ 2,125 $ (15,000) $ 78,842 (5.500) S (12,375) $ 116.987 $ $ $ 15,000) 78,842 94,862 15.000 $ 30,000 $ 4,500 JKS Goods, Inc. Balance Sheet For the Year Ended December 31, 2017 ASSETS Accounts receivable Cash Inventory Supplies inventory Prepaid expenses Equipment Total assets $ $ $ $ $ $ $ 62,000 14,000 55,000 3,000 12,000 105,000 251,000 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable Accumulated depreciation Allowance for doubtful accounts Dividend payable Income tax payable Interest payable Notes payable - long-term Payroll taxes payable Sales tax payable Total liabilities $ $ $ $ $ $ $ $ $ $ 18,500 28,000 2,000 15,000 13,913 3,000 50,000 3,000 600 134,013 Stockholders' equity Common stock Additional paid-in capital Retained earnings Treasury stock Total stockholders' equity Total liabilities and stockholders' equity $ $ $ $ $ $ 30,000 4,500 94,862 (12,375) 116,987 251,000 JKS Goods, Inc. Accounts Receivable December 31, 2017 Customer Name Invoice Date Amount Jackson Company 12/5/2017 16,000 Lucas, Inc. 10/15/2017 8,500 Mason, Corp. 11/20/2017 12,000 Logan, Co. 8/6/2017 18,500 Ida, Ltd. 11/7/2017 7,000 62,000 JKS Goods, Inc. Income Statement For the Year Ended December 31, 2017 Revenue Deferred revenue Product sales Total revenue $ $ $ 25,000 300,000 325,000 Cost of goods sold $ 11,660 Contribution margin $ 313,340 Operating expenses Salaries expense Payroll tax expense Rent expense Bad Debt Expense Supplies expense Depreciation expense Interest Expense Pretax income Income tax expense Net income $ $ $ $ $ $ $ $ $ $ 90,000 9,585 65,000 2,000 22,000 28,000 4,000 92,755 13,913 78,842 Earnings per Share $ 5.26 JKS Goods, Inc. Statement of Stockholders' Equity As of December 31, 2017 Common Stock Shares Amount 15,000 $ 30,000 Additional Paid- in Capital $ 3,500 $ 1,000 Retained Earnings $ 31,020 Balance as of January 1, 2017 Treasury stock, re-sold Cash dividends Net Income Balance as of December 31, 2017 Total Treasury Stock Stockholders' Shares Amount Equity (6,000) $ (13,500) $ 51,020 500 $ 1,125 $ 2,125 $ (15,000) $ 78,842 (5.500) S (12,375) $ 116.987 $ $ $ 15,000) 78,842 94,862 15.000 $ 30,000 $ 4,500 JKS Goods, Inc. Balance Sheet For the Year Ended December 31, 2017 ASSETS Accounts receivable Cash Inventory Supplies inventory Prepaid expenses Equipment Total assets $ $ $ $ $ $ $ 62,000 14,000 55,000 3,000 12,000 105,000 251,000 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable Accumulated depreciation Allowance for doubtful accounts Dividend payable Income tax payable Interest payable Notes payable - long-term Payroll taxes payable Sales tax payable Total liabilities $ $ $ $ $ $ $ $ $ $ 18,500 28,000 2,000 15,000 13,913 3,000 50,000 3,000 600 134,013 Stockholders' equity Common stock Additional paid-in capital Retained earnings Treasury stock Total stockholders' equity Total liabilities and stockholders' equity $ $ $ $ $ $ 30,000 4,500 94,862 (12,375) 116,987 251,000 JKS Goods, Inc. Accounts Receivable December 31, 2017 Customer Name Invoice Date Amount Jackson Company 12/5/2017 16,000 Lucas, Inc. 10/15/2017 8,500 Mason, Corp. 11/20/2017 12,000 Logan, Co. 8/6/2017 18,500 Ida, Ltd. 11/7/2017 7,000 62,000