Laura has just finished her first year of business and felt very good about the business but is worried that not all the information is accounted for when she reviewed the yearend on July 15, 2021. She has decided to hire William from Superstar Partners, LLP. to review the unadjusted trial balance. The following is the unadjusted trial balance as of June 30, 2021:

Laura Lee Inc.

Unadjusted Trial Balance

June 30, 2021

Account

Cash $ 31,000

Accounts Receivable $ 159,000

Inventory $ 42,000

Prepaids $ 9,500

Equipment $ 1,105,000

Accumulated Depreciation - Equipment $ 204,000

Other Assets $ 80,900

Accounts Payable $ 94,000

Unearned Revenue $ 35,000

Notes Payable (Due 2026):$100,000

Common Shares $ 364,750

Revenue$ 1,298,000

Salaries Expense $ 237,000

Rent Expense $ 329,000

Interest Expense $ 102,350

_____________________________

$ 2,095,750 $ 2,095,750

The following was reviewed with William and Laura and agree to the following adjustments for the year ended June 30:

a) Physical Inventory counts shows $16,500 of supplies on hand.

b) Prepaid rent at June 30 should be $5,000.

c) Depreciation for 2021 is $55,000.

d) Unearned Revenue should be 31,000.

e) Wages in the amount of $23,000 are owed but unpaid and not recorded at yearend.

f) Six Months interest at 6% on the note was paid on March 31. Interest for the period from April 1 to June 30 is not paid and not recorded.

g) Income tax of $89,000 is owed but not recorded and unpaid.

Laura wants Bill to provided her with the adjusting journal entries as well as the statement of earnings, statement of retained earnings and the statement of financial position. In addition, Laura thought about the following things, one is a bank reconciliation is done monthly, but no one looks at them. She also tries to monitor inventory by having everyone complete a job sheet. Each person is responsible for noting the inventory used and should be done immediately, however sometimes they are not done at that point, Laura reminds everyone to do at least at the end of each day. Laura also wants to look at better controls. Can you briefly explain some control issues that would be a benefit for Laura to institute or to improve on in which she is currently doing for the company?

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