Issue 2: Accounts Receivable From Officers At year-end ACE has $110,000 in accounts receivables from officers on the books. The Board of Directors approved these loans which are in the form of demand" notes. One of the staff assistants asked whether there was any intent to require officers to pay back these loans. Linda Wilson and Jan Wiggs, who each owe 1/2 of the total amount outstanding, agreed that while not much thought had been given to it, they imagined that they might someday repay the loans. On the other hand, they thought that the Board of Directors might forgive the loans some year in lieu of their annual bonus. Prepare a memo that summarizes relevant professional standards (standard and paragraph should be cited) related to each of the 6 issues and prepare any proposed journal entries. Discuss information that would be included in any note disclosures related to each of the six items (you need not draft formal note disclosures). Prepare entries for all misstatements you identify, regardless of the amount involved. That is, don't simply say no entry is needed because any amount involved would be immaterial. Assume that the current income is $2.997,216. For purposes of preparing journal entries, you may ignore income tax implications as any changes in taxes will be reflected later in the audit process after any entries have been posted to the working trial balance. Issue 2: Accounts Receivable From Officers At year-end ACE has $110,000 in accounts receivables from officers on the books. The Board of Directors approved these loans which are in the form of demand" notes. One of the staff assistants asked whether there was any intent to require officers to pay back these loans. Linda Wilson and Jan Wiggs, who each owe 1/2 of the total amount outstanding, agreed that while not much thought had been given to it, they imagined that they might someday repay the loans. On the other hand, they thought that the Board of Directors might forgive the loans some year in lieu of their annual bonus. Prepare a memo that summarizes relevant professional standards (standard and paragraph should be cited) related to each of the 6 issues and prepare any proposed journal entries. Discuss information that would be included in any note disclosures related to each of the six items (you need not draft formal note disclosures). Prepare entries for all misstatements you identify, regardless of the amount involved. That is, don't simply say no entry is needed because any amount involved would be immaterial. Assume that the current income is $2.997,216. For purposes of preparing journal entries, you may ignore income tax implications as any changes in taxes will be reflected later in the audit process after any entries have been posted to the working trial balance
