Posh Hotels Ltd. (PHL) is a small boutique hotel that provides 38 suites that can be rented by the day, week, or month. Food service is available through room service as well. In addition, there are two suites that have been rented on a long-term basis to corporate tenants, who have access to their suite anytime throughout the year without making a reservation. The company has a December 31 year end, and you are preparing the year-end financial statements using ASPE. The following issues require your consideration: 1. o O 3. Cash The hotel keeps a significant amount of euro currency on hand to meet the needs of its guests. At year end, there was 12,000 on hand. The year-end exchange rate was $1.35, and the average rate for the year was $1.42. The bank statement balance at December 31 was $158,293. There were outstanding cheques of $52,375 and an outstanding deposit of $15,487. Bank charges per the bank statement were $65 for the month of December and have been recorded. Accounts receivable and allowance for doubtful accounts The hotel charges $150 per night for accommodation in one of the rental suites, and guests pay at the end of their stay, with daily revenue being accrued as it is earned. At December 31, the amount outstanding from short-term guests was $10,500. At year end, management expects to be unable to collect an amount equal to 5% of the outstanding receivables for this type of suite. During the year, sales amounted to $1,750,000, and the balance in Allowance for Doubtful Accounts at the end of the previous year was $15,000. During the year, $32,000 in accounts was written off. The two corporate suites are rented for $45,000 per yea r. The payment for these longer-term rentals is due in advance each July 1 for the following 12 months. One of these corporate suites has been in use for part of the year, but the corporate tenant went bankrupt and was unable to pay the $45,000 fee. Hotel management had hoped the tenant would eventually be able to pay, and it allowed the company to use the suite until the end of October. Since then, the hotel has been in negotiations with the bankruptcy accountant and expects to eventually receive a settlement of $10,000. The balance will become uncollectible; no allowance for doubtful accounts has been recorded with respect to these suites as there have never been collection problems in the past. Inventory