Dave Wooden started Wooden Corporation in 1998 as a small consulting company specializing in streamlining and improving grocery store displays and related inventory configurations. The company has been very successful in improving client bottom lines through the use of cutting edge technology to generate fairly accurate information on current consumer trends and opportunities and providing end-results utilizing highly-creative innovations specific to each client. Currently, the company provides these services to a multitude of entities ranging from small, local concerns to some larger, nationally recognized chains. The company itself is a closely held entity with Dave serving as the majority stockholder and president along with a handful of other, unrelated smaller investors. Overall company strategy and primary customer contact is driven by Dave with daily operational activities being led by Daves oldest son, Donnie. All remaining activities (primarily administrative and marketing) are guided by Daves wife, Sarah. Both Donnie and Sarah each supervise staffs of approximately five individuals that perform the majority of the day-to-day work-load.

Dave (a long-time friend) has recently reached out to you (a licensed CPA in public practice) to take a look at the some of the financial information of Wooden Corporation for the year ended 2016. Your analysis will result in the preparation, in proper form, of an unaudited Classified Balance Sheet to be used as supporting documentation in an application for a long-term loan to be used for future growth.

Johnny Gilmer, the internal accountant for Wooden who maintains the companys financial records, has prepared all the tax returns and financial information for the corporation since January 2, 2010. Gilmer provides you with a Recap of Financial Position providing the information listed below:

After a preliminary review of the above information, you approach Dave and Johnny with several questions for clarification and the subsequent discussion revealed the following:

• On May 1, 2016, the corporation issued $750,000 of bonds to finance future plant expansion. The proceeds are included in Cash and Cash Equivalents. The long-term bond agreement provided for the annual payment of principal and interest over five years. As of the 2016 year-end, interest due on the bonds has not been recognized in the financial statements.
• In 2013, the ending inventory was overstated by $183,000. The ending inventories for 2014, 2015, and 2016 were correctly computed.
• Insurance amounting to $100,000 was purchased during the year and was expensed when purchased, leaving the balance of prepaid insurance unchanged from the beginning of the period. The balance of unused insurance at the end of 2016 totaled $52,000.
• The Claim for Income Tax Refund stemmed from a Net Operating Loss in 2015 that was carried back to a prior year (2013) and was used to offset income for that year resulting in a refund. The returns were prepared by Gilmer and the carryback appropriately followed Federal Tax guidelines.
• In accordance with GAAP, the Premium on Common Stock represents amounts that all stockholders paid in excess of the par value of the stock.
• Income Taxes Payable are the estimated amounts due for 2016 earnings.
• The balance in Accounts Receivable includes a $25,000 balance owed by a particular customer that has signed a written agreement to pay the amount in monthly installments over the next two years with interest. The first payment was made on December 31, 2016 and was recorded as a debit to Cash with a credit to Accounts Receivable for the entire amount (principle and interest). Gilmer plans to adjust Accounts Receivable when the amount is fully paid to recognize interest income at that time and honestly believes that the entire amount will be collected. This way, the adjustment for income will be easy to make since the balance in the account will be equal to the amount of total interest paid. The customer has a record of filing for bankruptcy from time to time.
• In 2016, wages in the amount of $33,000 were not appropriately accrued and were therefore omitted from the balance sheet and not charged to the income statement.
• In 2015, the company replaced the roof on the Administrative building at a cost of $280,000. The replacement was completed in phases over a five month period, paying roughly 20% of the total cost each month. When the roof was replaced, the composition of the roof was changed from an asphalt shingle roof to a clay tile roof for both aesthetic value and to increase the life expectancy. To simplify accounting, the entire amount was expensed as a repair.
• A major competitor has introduced a line of products that will compete directly with Warrens primary line, now being produced is a specially designed new plant. Because of manufacturing innovations, the competitors line will be of comparable quality but priced 50% below the clients line. The competitor will meet the lower prices that are high enough to cover variable manufacturing and selling expenses, but permit recovery of only a portion of fixed costs.
• The Investment in Land was for the current Administrative Building. The company plans to use the proceeds from the current note application to acquire additional land and begin construction on a new building sometime after 2020.
• In 2016, a gain of $150,000 (net of tax) on the sale of certain plant assets was credited directly to retained earnings.
• Dave refused to release any other information or documentation to you stating the information was proprietary in nature that release of the information would compromise the companys long-range plans. Therefore, you have all you need to prepare the unaudited Classified Balance Sheet. In addition, Dave has made it very clear that approval of the loan is critical to expand the business and he would pay what-ever is necessary for you to produce a document that will assist in the approval.

REQUIREMENTS

Discuss in detail any issues and discrepancies along with the impact on the 2016 year-end unaudited Classified Balance Sheet you do not need to prepare any financial statements, just analyze the ramifications of the items discussed above. Please discuss each item separately and your discussion must exceed 400 words. Your discussion must be at least two pages in length and no more than four pages. Again, you do not need to perform any calculations, just describe the nature if the issue and its effect on Woodens financial statements.

Your Microsoft Word Document (please do not submit any other type of document) must use Times New Roman 12 Point font with one inch margins, single spaced. Also indent by inch the first line of each paragraph. You will submit your document through Blackboard using SafeAssign, so please ensure that your document is in your own words. Please ensure that your SafeAssign Match percentage is less than 15%. You will be allowed multiple draft postings of your document to achieve the 15% Match limit. The assignment is due at the end-of-day on November 6^th.

Wooden Corporation Recap of Financial Position (unaudited) December 31, 2016 Assets Current Assets Other Assets Total Assets 1,823,130 6,678,700 8,501,830 An analysis of Current Assets discloses the following: Cash and Cash Equivalents Investments in Land Accounts Receivable less allowance of $48,000 Inventories (LIFO flow assumption) Totals 1,113, 195 106,500 118,710 484,725 1,823,130 Other Assets include: Prepaid insurance Buildings (less Accumulated Depreciation of $1,506,310) Cash surrender value of life insurance policy Unamortized bond discount Claim for Income Tax Refund Vehicles (less Accumulated Depreication of $68,833) Equipment (less Accumulated Depreciation of $153,724) Totals 47,073 5,123,490 90,198 45,830 182,148 547,100 642,861 6,678,700 Liabilities and Equity Current Liabilities Long-term Liabilities Owners Equity Total Liabilities and Equity 2,450,465 1,500,000 4,551,365 8,501,830 Current Liabilities include: Accounts payable Notes payable (due 2019) Income Taxes payable Premium on Common Stock Totals 480,000 1,682,213 150,000 138,252 2,450,465 Long-term Liabilities and Equity include: Retained Earnings Capital Stock ($10 par, 200,000 authorized, 150,000 issued Totals 4,551,365 1,500,000 6,051,365 Wooden Corporation Recap of Financial Position (unaudited) December 31, 2016 Assets Current Assets Other Assets Total Assets 1,823,130 6,678,700 8,501,830 An analysis of Current Assets discloses the following: Cash and Cash Equivalents Investments in Land Accounts Receivable less allowance of $48,000 Inventories (LIFO flow assumption) Totals 1,113, 195 106,500 118,710 484,725 1,823,130 Other Assets include: Prepaid insurance Buildings (less Accumulated Depreciation of $1,506,310) Cash surrender value of life insurance policy Unamortized bond discount Claim for Income Tax Refund Vehicles (less Accumulated Depreication of $68,833) Equipment (less Accumulated Depreciation of $153,724) Totals 47,073 5,123,490 90,198 45,830 182,148 547,100 642,861 6,678,700 Liabilities and Equity Current Liabilities Long-term Liabilities Owners Equity Total Liabilities and Equity 2,450,465 1,500,000 4,551,365 8,501,830 Current Liabilities include: Accounts payable Notes payable (due 2019) Income Taxes payable Premium on Common Stock Totals 480,000 1,682,213 150,000 138,252 2,450,465 Long-term Liabilities and Equity include: Retained Earnings Capital Stock ($10 par, 200,000 authorized, 150,000 issued Totals 4,551,365 1,500,000 6,051,365