Introduction

You are a junior financial analyst for the CPA firm, ACCT LLP. Your firm specializes in providing a wide variety of internal financial solutions for local small businesses. Today is your first, a Senior Manager has requested your support on the first client engagement to provide financial reporting service for the year end.

Client Background

Godox Inc. was established in 1995 when it first opened its doors in Calgary, AB. Godox Inc. has grown over the years with lighting equipment but the wireless strobe lightings remain the most popular items amongst the 10 varieties of lighting. The business has been expended to distribute its products in different province and it is currently owned by Strobe family. Godox operates out of 10,000 sqft location and it has one studio and warehouse at the back. Godox pays $10,000 per month for the rental of the space. Strobe family was able to negotiate with the landlord and were not required to pay the first months rent in advance. All of the rental payments are current and up to date. For the last two years, Strobe has had a very reliable external accounting firm prepare its year-end financial statements and everything has been correct. This year, Strobe is planning to hire a junior accountant in house to cut the cost, and the junior did the best he could collect and record financial information to their financial system. For the information he was not sure about, he kept all the required supporting documentation.

Now it is yearend preparation and Strobe hired your firm to prepare their financial statements for the year. They provided you with the unadjusted trial balance and the information in Exhibit 1.1 to assist you. Supplementary Information Godox has a note that their owed $15,000 in wages to his employees for the period ending December 31st. Godox owed in rent the period ending December 31st To expand their warehouse, Godox has started a bank loan of $20,000 with the local bank on January 1st this year. The loan carried an interest rate of 10%. The interest is due as the same time as the loan by January 1st next year. Godox sometimes book special workshop with local well-known photographer and they have a payment in two weeks. On December 28th, a local photographer had a workshop at the location for 3 days. Godox charges one time setup fee of $500 and $300 for daily rental. The junior accountant has not yet sent out invoice and recorded. Godox declared a dividend of $1,000 on December 30th,which will be payable in Jan 10th next year. Godox has some office supplies. At begin of the year, they had $2,500 of the office supplies in their warehouse including printing paper, backdrop and tapes. During the year, they purchased $5,000 more. On December 31st, there are only $2,000 of the supplies left. The junior didnt know how to record depreciation for the year and so left it for you to record. depreciation 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: 2 years Lift equipment: 15 years Studio furniture and fixtures: 10 years The invoice shows that Godoxs owes $1,500 for a utilities bill and $4500 for advertising agency for the month of December. These amounts have not been recorded yet. This years insurance policy has been renewed on July 1st for $12,000. The policy will run from July 1 to June 30 of each year. The amount currently sitting in prepaid insurance due the insurance policy purchased in July this year and unadjusted insurance expense for the policy purchased from the last year. The junior didnt know how to make adjustment, so he left it.

Requirements Based on the information you need to prepare adjusting journal entries, an adjusted trial balance, the statement of earnings (income statement), statement of retained earnings, and the statement of financial position (balance sheet).

Accounts	Debit	Credit
Cash	185000
Accounts Receivable	147000
Inventory	750000
Office Supplies	7500
Prepaid Insurance	18000
Computers	30000
Accumulated Amortization Computers		15000
Lift Equipment	90000
Accumulated Amortization Lift Equipment		18000
Furniture and Fixtures	150000
Accumulated Amortization Furniture and Fixtures		60000
Accounts Payable		18000
Salary Payable
Interest Payable
Dividend Payable
Long-term Loan		20000
Common Shares		100000
Retained Earnings		101000
Equipment Sale Revenue		1580000
Rental Revenue		21000
Rental Expense	55000
Advertising Expense	62000
Utility Expense	16500
Telephone Expense	12000
Interest Expense	0
Salary Expense	350000
Insurance Expense	0
Supplies Expense	0
Depreciation Expense
Rent Expense	60000
	1933000
		1933000