Hi everyone! I need help with questions B and C. Thank you!

Accounting Notes 1. Historical cost basis is used in recording building, equipment and motor vehicles, with estimated useful lives being 50 years, 10 years and 5 years respectively (the units of products serviced by the equipment is estimated to be 600,000 units). The building was acquired on 1 April 2014 whereas all equipment and motor vehicles are acquired on January 1, 2015. The depreciation methods and salvage values of these assets are tabled below: Asset Class Buildings Equipment Motor vehicles Depreciation Method Straight-line Units-of-Activity Double declining balance Salvage Value Nil 10% of acquisition cost 10% of acquisition cost 2. The allowance for doubtful accounts is estimated based on 5% of ending account receivable balance. Freight charges are settled by cash. The firm adopts a 360-day year in interest related computations MAD Outdoors Chart of Accounts Account Names 2010 Accounts Payable 1120 Accounts Receivable 1460 Accumulated Depreciation - Building 1520 Accumulated Depreciation Equipment 1670 Accumulated Depreciation - Motor vehicle 1130 Allowance for Doubtful Accounts 6120 Bad Debt Expense 1450 Building 1050 Cash 7130 Depreciation Expense - Building 7150 Depreciation Expense - Equipment 7180 Depreciation Expense - Motor Vehicle 2500 Dividends Payable 1500 Equipment 6410 Freight-in Expense 6430 Freight-out Expense 7330 Fuel Expense 8240 Gain on Disposal 9050 Interest Expense 2350 Interest Payable B200 Interest Revenue 1300 Land 1800 Long-term Investment 8340 Loss on Disposal Account Names 7420 Miscellaneous Expense 1910 Motor Vehicle 2020 Notes Payable 1150 Notes Receivable 3530 Ordinary Share Dividends Distributable 1400 Prepaid Insurance 6180 Purchase Discounts 6210 Purchase Returns and Allowances 6110 Purchases 7220 Insurance Expense 3200 Retained Earnings 2140 Salaries Payable 7400 Salaries Expense Ann 4010 Sales Revenue 4120 Sales Returns and Allowances 3100 Share Capital - Ordinary 3300 Share Capital - Preference 3150 Share Premium - Ordinary 3350 Share Premium - Preference 3950 Share Premium - Treasury 1260 Supplies 7390 Supplies Expense 3900 Treasury Shares 2190 Rental Contract Liability 1200 Merchandise Inventory 7320 Utilities Expense 3500 Income Summary MAD Outdoors Trial Balance as at November 30, 2018 450,000 10,740,000 1,879,000 780,000 1,760,000 650,000 985,000 12,000 36,240 87,500 Accounts Receivable Building Cash Equipment Long-term Investment Merchandise Inventory Motor Vehicle Prepaid Insurance Supplies Treasury Shares (35,000 shares) Accounts Payable Accumulated Depreciation - Building Accumulated Depreciation - Equipment Accumulated Depreciation - Motor Vehicle Allowance for Doubtful Accounts Dividends Payable Retained Earnings Salaries Payable Share Capital - Ordinary Share Capital - Preference Share Premium - Ordinary Share Premium - Preference Share Premium - Treasury 465,400 867,800 590,000 787,430 13,500 80,000 1,378,760 100,850 4,500,000 7,200,000 790,000 540,000 66,000 17,379,740 17,379,740 Upon further examination of the accounting records on November 30, 2018 reveals the following: Account Name: Retained Earnings Debit Credit Date Nov 1 16 80,000 Balance 1,400.450 1,320,450 1,383,660 1,378,760 63,210 30 4.900* Account Name: Supplies Expense Dato Debit Credit Nov 5 350 Balance 350 5.350 3.350 5,000 2,000 1,550 4.900 "A note was posted beside the entry and it read: "?". Tracy was not sure what the note means. An accounting officer has summarized the transaction occurred in December, 2018 as follows before he quit the firm: Dec 3 8 9 10 11 Bought camping cook sets amounted to $150,000. Settled by signing a 90-day, 6% note payable. A loyal customer, Boyle Adventures, cannot settle the outstanding receivable amounted to $360,000 as the office was destroyed by a fire. The firm agreed to accept a 10%, 90- day note from Boyle Adventures to settle the receivable amount. Bought 3,750 supplies from Hong Tak Goods on account. Purchased 25,000 ordinary shares of its own firm at $2.5 per share with cash. Received consigned goods from Bold Mountain Tech amounted to $85,000. 750 sport watches were sold to Fitch Sports Club (FSC) for $97,500, terms 2/10, n/30, FOB shipping point. The shipping charge for the sales is amounted to $535. The shipment was made on December 12, 2018 and expected to reach FSC in 3 calendar days. Incurred machine repair expense for $1,380 on account. Sold hiking apparel and boots to Mark Outdoor Training (MOT) in cash at a list price of $366,000. MOT is offered a trade discount of 10% and a cash discount of 2% on this transaction, FOB shipping point with related freight charges being $6,450. MOT received the goods 4 working days after. The company sold its motor vehicle originally cost $180,000 for $7,500 cash. Received a motor vehicle repair receipt of $10,300 for the repair made in October 2018 which was settled by cash. Upon FSC's rounds of complaints on the quality issues on the watches they purchased, MAD management decided to grant FSC an allowance of $7,500 based on the original selling price. 12 15 16 17 17 Paid salary up to Dec 17, 2018 for $155,000. MAD Outdoors adopted a five-workday per week. Employees are paid every four weeks on the following Monday, based on the number of days they have worked in the last four weeks. Employees are entitled to full pay on public holidays but not on Saturday and Sunday. Sold 50,000 treasury shares at $1.5 per share. 18 18 The Board of Directors declared 5% share dividend. Market price on the day is $1.8 per share. 19 Received payment on FSC on December's purchase. 20 A customer, Johnny Fitness (JF) is declared bankrupt. JF has an outstanding balance of $10,300 and the firm considered the entire amount being uncollectable. Distributed share dividends to registered shareholders and paid previously declared dividend. 22 23 Settle 225,000 account payable outstanding with Kumaloft Limited related purchases made on November 29. Terms being 2/10, n30, FOB shipping point. Rented the unused portion of the office building to Blackrock Training Limited (BTL). The rental contract is for two years and starting from the beginning of next month. BTL has paid $240,000 in advance for the first 12 months of the rental. 28 The board of directors declared a cash dividend on MAD's preference shares and $0.05 cash dividend on each ordinary shares. Utilities expenses for December is amounted to $7,880 due in Jan 10, 2019. 31 Other information: 1. The equipment has serviced 63,500 products for the month of December. A physical inventory count on December 31 reveals the total inventory on hand being $740,000 (including supplies amounted to $25,000 and consigned goods being $45,000). The prepaid insurance provides insurance coverage over a 12-month period starting from Dec, 2018. A Total weekly (5-work days) salary for the employees amounted to $48,000. No employee is absent for the month of December. A further search reveals the following source documents which are not included on the transaction summary above: PURCHASE INVOICE Monsanto Equipment 18/F, Good Hope Centre, Mongkok, Kowloon Sold To: MAD Outdoors 8/F, Evergain Tower, Kwai Chy N.T. Hong Kong Goods received: Dec 8, 2018 Paid: Dec 22, 2018 Date: 5 December 2018 Terms: 1/30, n/60, FOB Shipping Point (Freight charge: $1,000) Quantity Unit Cost 100 Description Climbing ropes (Mommat infinity) Gas stove (ISG Windburner) 200.00 Amount 20,000.00 37,500.00 500.00 Total 57,500.00 Customer Copy SALES INVOICE MAD OUTDOORS 8/F, Evergain Tower, Kwai Chung, N.T. Hong Kong Sold To: Fabulous Ventures Date: 3 December 2018 10/F, Chorpura Tower Terms: 2/10, n/30, FOB North Point, Hong Kong Destination (Freight charge: $1,500) Quantity Item Unit Cost Amount 100 Four Seasons Tent (EV330) 1500.00 150,000.00 50 Sleeping Bag (EV Touch) 500.00 25,000.00 Total 175,000.00 MERCHANT COPY Payment Received: Dec 11, 2018 Shipped: Dec 4, 2018 Ships CREDIT MEMO Monsanto Equipment 18/F, Good Hope Centre, Mongkok, Kowloon Sold To: MAD Outdoors Date: 9 December 2018 8/F, Evergain Tower, Kwai Chung Terms: 1/30, n/60 N.T. Hong Kong Quantity Description Climbing ropes (Mommat infinity) Gas stove (ISG Windburner) Unit Cost 200.00 Amount 2,000.00 7,500.00 15 500.00 Total 9,500.00 Required: a. Discuss the following: () ethical issues, three key stakeholders and how they are affected. (i) the deficiencies present in MAD Outdoors accounting and control systems. (Limit to 300 words for part (a)) Preparo journal entries to record all necessary transactions for MAD Outdoors for December 2018 in the general journal. Omit journal explanations and closing entries. C. Prepare the Income Statement and Statement of Financial Position MAD Outdoors, in good form, for December 2018