JWC Electric Co. (JWC) is a public company which has been in business for over 30 years. The company is a manufacturer of Audio and Video products, which they primarily sell to commercial customers. Three years ago, JWC decided to add record players to their product line because of the trend back to vinyl records. Their manufacturing facility cannot accommodate the production of record players so JWC purchased a factory that already produced record players. In order to finance this expansion, the company issued bonds to the public on the TSX exchange. To entice people to buy the bonds, the company states that it will not give out yearly dividends more than annual net income for the 10 year bonds. As a consequence, the Board of Directors wants to ensure the companys net income does not hinder the payment of dividends to its current common and preferred shareholders. Today is December 18, 2020, and you, CPA, have just been assigned by the CFO to handle the accounting for the new record players large business contracts. You have worked for the company for many years now but your accounting training was on Canadian GAAP and not IFRS. The companys year end is December 31, 2020 but the report, which you will submit to the CFO and CEO, is not due for another month. NOTE: Year 2020 is the first year the company started to sell record players. 1. JWC signed a contract with Future Shop, a chain of stereo stores in Toronto, in December of 2020. JWC delivered 10,000 record players for a total contract price of $2 million to Future Shop in December of 2020. The total production costs are $1,400,000. JWC offers a two year warranty with these record players. JWC also sells this warranty separately for $50 per record player. Industry analysis shows that the stand alone value of the 10,000 record players is $1,750,000. Payment is due 60 days after shipment. The financial accountant only recorded Sales Revenue and the related Cost of Goods Sold for the full amount of the contract.(11 marks) 2. During January of 2021, JWC had started preparing its Statement of Cash flows (SCF) using the direct method. In prior years it had always used the indirect method because most companies in the industry did. The CFO is not familiar with the direct method so has asked you to explain why estimated net income is going to be its highest ever but the change in total cash flow is negative. You know that during fiscal year 2020, the company had made a lot of sales of old assets and replaced them with modern assets. (6 marks) 3. In December of 2019, JWC entered into an arrangement to manufacture record players for Majestic Sounds Co. Majestic sounds would call these record players Lion Phono (Selling price of $120 to Majestic). The contract specifies the following: (i) Majestic will have 100 record players delivered to them monthly for every month of 2020. This was satisfied (ii) once a sale is completed by Majestic, Majestic will input the order to JWC via the internet. This requirement is for a bonus points plan that kicks in any time Majestic orders more than 100 record players in any month. The bonus amounted to $50,000 for fiscal year 2020. JWC has expensed the bonus points but only recorded the sales when Majestic made a sale. As of December 31, 2020, there were 200 record players that had been delivered to Majestic, but not yet sold by Majestic. (6 marks) Required: (Total 30 marks) Provide a case plan which identifies major forces (e.g., users and their needs, constraints, and management preferences, etc.) that may affect JWCs financial reporting objectives. Be sure to keep your plan case-specific. (4 marks) Provide a report to the CFO and CEO. Ensure that you discuss and recommend how each event should be accounted for. Be sure to also discuss financial statement implications and if applicable, neatly write out numerical effects and journal entries. (23marks)