No more Information

QUESTION 1 (10 marks) You are the loan officer of a multinational bank. A small company, Samson Company, would like to apply for a loan. In support of the loan application, Samson Chan, owner, submitted a Trial Balance for the first year of operations ended on December 31, 2019. You have asked the company to submit other financial statements that include Income Statement, Statement of Financial Position and Cash Flow Statement for evaluating the performance of the company. Samson Company Trial Balance December 31, 2019 S 6,400 187,300 68,000 20,500 Supplies Machinery Equipment Cash Share capital Service revenue received Salaries paid Utilities paid Rent paid Insurance paid 160,000 391,120 121,000 8,000 130,000 9,920 551,120 551,120 In discussing the Trial Balance with Samson Chan, you asked whether adjusting entries have been prepared to get the accounts up to date for the Trial Balance. Samson Chan answered that they have not been adjusted. Required: a. Explain why the bank would need to read other financial statements such as Income Statement, Statement of Financial Position and Cash Flow Statement. (3 marks) b. Explain why the loan officer suspected that the accounts had not been adjusted prior to the preparation of the Trial Balance. (3 marks) c. Indicate FOUR possible adjusting entries that might be necessary before an accurate set of financial statements could be prepared. (4 marks)