Henrietta's Pine Bakery Background You are an Analyst for the professional service firm, BUSI 1043 LLP. Yourfirm specializes in providing a wide variety of internal business solutions for different clients. Given the outstanding feedback you received on your first engagement working for Big Spenders Inc; a Senior Manager in the Financial Advisory group requested your support on a compilation engagement. I Additional Information Henrietta's was established in 1963 when it first opened its doors in Dwight, Muskoka on highway 60. Over the past 50 years, there have been four owners and is currently owned by Carine 8. Geoff Harris who incorporated and took overthe store on January 1, 2013. Their sons, Kyle and Nicholas have been an intricate part of the business from dishwashing to head bakers. Henrietta's has grown over the years with the addition of new items all the time, but the 'Sticky Eiuns and lClouds" remain the most popular items amongst the 150 varieties of bread and pastries. Henrietta's runs out of 90 square meters (1,000 share feet) of space. It has one entrance into the bakery and doors leading outto highway 60. Henrietta's pays $5,000 per month for the rental ofthe space. Carine and Geoffvvere able to negotiate with the landlord and were not required to pay the first month's rend in advance. All of the rental payments are current and up to date. For the last two years, Henrietta's has had a very reliable accountant prepare its yearend financial statements and everything has been correct. This year, Henrietta's accountant retired and Geoff did the best he could to record his own nancial information. Forthe information he was not sure about, he kept all ofthe required supporting documentation. Geoff hired your firm; BUSI 1043 LLP to prepare his financial statements for the year. Geoff supplied you with his unadjusted trial balance and the information in Exhibit I to assist you. I Supplementary Information The amount currently sitting in prepaids arose duethe insurance policy last year. Geoff didn't know how to correct it so he left it.This year's insurance policy was purchased on November 1 for 891000. The policy runs from November 1 to October 31 of each year. Geoff has a note that he owed $900 in wages to his employees for the period ending December 31st. The loan was incurred when the bakery was opened. The loan carried an interest rate of 8%. The interest is payable two months afteryear-end, and the principal is due in 2019. Henrietta's will sometimes book special events with small organizationsthat are allowed to pay after the event has taken place. On December 29th, a small company had a gathering at the bakery. The company was billed $1,089 and had 30 days to pay it. Geoff has not yet recorded this in his financial records. Henrietta's declared a dividend of85,000 on December 30th. Geoff didn't know how to record amortization forthe year and so left it for you to record. Amortization for all assets is charged using a straight-line method by taking the cost of the asset and dividing it by its expected useful life. The assets have expected useful lives as follows: 0 Computer: 5years 0 Bakery equipment: 10 years 0 Furniture and fixtures: 20 years The information shows that Henrietta's owes 8400 for a telephone bill and $400 for electricity for December. These amounts have not been recorded yet. Exhibit I Henrietta's Pine Bakery Unadjusted Trial Balance December 31, 2015 Account Name Debit Credit Cash $35,000 Accounts Receivable 5,600 Food Inventory 21,000 Merchandise Inventory 62,500 Prepaids 3,400 Computers 30,000 Accumulated Amortization - Computers 12,000 Bakery Equipment 90,000 Accumulated Amortization - Bakery Equipment 18,000 Furniture and Fixtures 150,000 Accumulated Amortization - Furniture and Fixtures 15,000 Accounts Payable 18,000 Accrued Liabilities Interest Payable Dividend Payable Long-term Loan 220,000 Common Shares 50,000 Retained Earnings 22,000 Food Revenue 468,500 Internet Revenue 127,000 Merchandise Revenue 103,000 Food Expense 240,000 Internet Expense 54,000 Electricity Expense 65,000 Telephone Expense 20,000 Interest Expense 0 Salary Expense 200,000 Insurance Expense 9,000 Supplies Expense 8,000 Depreciation Expense Rent Expense 60,000 1,053,500 1,053,500Based on the information, you have prepared the adjusting journal entries, an adjusting trial balance, the statement of earnings (income statement), statement of financial position (balance sheet), and statement of retained earnings. After you have completed the statements, prepare the closing journal entries and the posting closing trial balance. Ensure you show all of your work, and prepare proper journal entries and properly formatted financial statements. Note to students: Issues are hidden within the case. It is your responsibility to read the case facts and identify the critical issues required for discussion and analysis. Evaluation Case Analysis 2 will be marked in its entirety out of 100. The following scale indicates the criteria students are to adhere to, and their relative weights to the assignment overall. Activity/Competencies Demonstrated % of Final Grade Identification and Analysis of Issues /100 a. Adjusting Entries /17 b. Adjusting Trial Balance /10 c. Balance Sheet /28 d. Statement of Operations /13 e. Statement of Retained Earnings 16 f. Closing Entries /16 g. Post-Closing Trial Balance /10 Total /100Case Analysis 2 . Due no later than 11:00 p.m. on Sunday of Unit 9 . Worth 5% of final grade Late Submission Policy This assignment is subject to the Late Submission penalty policy, namely 5% per day for three days. . This page will close and will not allow further submissions after this Late Submission period has expired. In the event of an emergency preventing you from submitting within this time frame, special permission must be obtained from your instructor. Documentation substantiating emergency is required. In such a circumstance, if the extension is granted, the professor will reopen the submission function for you on an individual basis Please do not email your submissions to your professor, either before or after the due date; all coursework should be submitted through the online course (Moodle). Objectives On successful completion of this assignment, students should be able to: . Develop an ability to identify and assume an assigned role. . Identify and rank the importance of explicit issues. . Illustrate the importance of hidden (undirected) issues that arise from a detailed analysis. Identify accounting issues (GAAP/IFRS compliance issues), assess their implications, generate alternatives, and provide recommendations within the bounds of GAAP/IFRS to meet the client's needs. Examine how accounting standards impact financial measures (ratios, covenants, etc.). Prepare a coherent report and integrated analysis that meets specific user needs Brief Description To be used in class as class activities. Students are required to prepare for the cases before class time. Students may be allowed to form groups to present their answers. Submission Instructions In order to complete your case analysis successfully, you should consider: . identifying the role you are playing, assessing the financial reporting landscape considering the user needs, constraints, and business environment, identifying the issues, . analyzing the issues (qualitatively and quantitatively), and . providing a recommendation for each issue identified in the case. You are required to prepare for the case before the class and bring any documents that will support your analysis. An average grade will come from you answering questions with basic coverage and accuracy, showing all your preparation. Additional points come from including greater detail, astute and informed commentary where appropriate, and connections to readings and other content