Henriettas 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 & Geoff Harris who incorporated and took over the 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 Buns and Clouds" remain the most popular items amongst the 150 varieties of bread and pastries.

Henriettas runs out of 90 square meters (1,000 share feet) of space. It has one entrance into the bakery and doors leading out to highway 60. Henriettas pays $5,000 per month for the rental of the space. Carine and Geoff were able to negotiate with the landlord and were not required to pay the first months rend in advance. All of the rental payments are current and up to date. For the last two years, Henriettas has had a very reliable accountant prepare its year-end financial statements and everything has been correct. This year, Henriettas accountant retired and Geoff did the best he could to record his own financial information. For the information he was not sure about, he kept all of the 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.

Supplementary Information

• The amount currently sitting in prepaids arose due the insurance policy last year. Geoff didnt know how to correct it, so he left it. This years insurance policy was purchased on November 1 for $9,000. The policy runs from November 1 to October 31 of each year.
• Geoff didnt know how to record amortization for the 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:
  • Computer: 5 years
  • Bakery equipment: 10 years
  • Furniture and fixtures: 20 years
• The information shows that Henriettas owes $400 for a telephone bill and $400 for electricity for December. These amounts have not been recorded yet.

• Exhibit I Henriettas 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	1,053,500

• Based 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.