Uities Evpnse Ja-Beau Supplies & More (JBSM) is a merchandiser, dealing in the buying and selling of ladies apparel and beauty supplies. Despite the COVID-19 pandemic, the business has experienced a rapid growth in sales and the owner is faced with a need to seek external financing. The owner of Ja-Beau, Breanna Lloyd, is a long-time client of Scotia National Bank (SNB) and has approached her personal banker to discuss the feasibility of getting external financing. She has been informed that because of the increase in non-performing loans, the Bank has tightened its policy as it relates to lending to business clients in the retail business sector. The business banking manager is however willing to ensure that granting the loan would be financially feasible for SNB. Ms. Lloyd has approached the organization to which you are employed as a junior finance officer, to put together the financial package that she will present to Scotia National Bank (SNB). Your Chief Financial Officer fumished you with the latest trial balance for JBSM, along with other information relevant to the year under review and you are tasked to prepare the documents requested by the business banking manager. Below is the trial balance which was extracted from the books of the business on June 30, the end of JBSM's financial year. Unearned Sales onsider her case and is requesting a full set of financial statements to Ja-Beau Supplies & More Trial Balance as at June 30, 2021 Dr $ 177,000 185,000 Cr$ Cash Accounts Receivable Allowance for Bad-Debts Merchandise Inventory 12,500 Stationery & Supplies Prepaid Insurance Prepaid Rent Furniture & Foxtures Accumulated 187,500 28.000 72,000 56,000 780,000 Depreciation: Fumiture & Fadures 272,000 Computer Equipment Accumulated Depreciation: Computer Equipment Accounts Payable Salaries Payable Interest Payable 450,000 137,550 22,950 82.000 360,000 893,500 Revenue Long-Term Loan Breanna Lloyd, Capital Breanna Lloyd, Withdrawals Sales Revenue Earned Sales Discount Sales Returns t of Goods Sold 108,000 1,073,000 7,000 8,500 403.000 165,000 & Allowances Cost Salaries Expense Insurance 91,550 Utilities Expense Rent Expense Depreciation Expense- Furniture & Fixtures Depreciation Expense- Computer Equipment Stationery & Supplies Expense Gain on Disposal of Old Computer Equipment Bad-Debt Expense Interest Expense Total 126.000 14.000 22.950 2.867.500 2.867.500 The following additional information is available on June 30, 2021: (i) Insurance of $72,000 was paid on May 1, 2021, for the 6-months to October 31, 2021. (ii) Rent was paid on March 31, 2021, for the 4-months to July 31, 2021. (ii) Stationery & Supplies costing $5,000, purchased on account on June 28, 2021, was neither recorded nor posted. Stationery & Supplies on hand at June 30, 2021 amounted to $9,000. (iv) The furniture and fixtures have an estimated useful life of 8 years and is being depreciated on the fixed-instalment method down to a residual value of $236,000. The computer equipment was acquired on March 31, 2021 and is being depreciated over 5 years on the double-declining balance method of depreciation, down to a residue of $40,000. (v) (vi) Merchandise costing $7,200 was sent to a customer on a sale or return basis. Inventory costing $3,000 remained unsold on June 30, 2021. Ja-Beau uses a mark-up of 33%% on costs. (vii) A customer to whom clothing & beauty supplies amounting to $87,500 was sold on account on June 25, 2021, was neither recorded nor posted. (viii) Salaries earned by employees not yet paid amounted to $18,000 on June 30, 2021. (ix) The long-term loan bears interest of 8%% per year. The unadjusted Interest Expense account equals to the amount accrued for the first three quarters of the 2020 fiscal year. The accrued interest for the last quarter has not yet been paid nor recorded. (x) At June 30, 2021, $54,000 of the previously unearned sales revenue had been earned. (xi) The aging of the Accounts Receivable schedule at June 30, 2021 indicated that the Allowance for Bad-Debts should be $20,500. (xii) After making all other adjustments, a physical count of inventory was done, which reveals that there was $186,000 worth of inventory on hand at June 30, 2021. Other data: (xiii) The business is expected to make principal payments totalling $72,000 toward the loan during the fiscal year to June 30, 2022. Required: a) Prepare the necessary adjusting journal entries on June 30, 2021. [Narrations are not required) b) Using the adjusted trial balance, generate the statements requested by the the client, as requested by the business banking manager, i.e. A multiple-step income statement & a statement of owner's equity for the year ended June 30, 2021 A classified balance sheet, in report format, at June 30, 2021. c) The bank is also interested in profitability and solvency ratios to input in its risk scoring models. Using the statements generated in b) above, calculate the following ratios 1) Current Ratio 2) Debt Ratio 3) Inventory Turnover (Inventory on hand at June 30, 2019 was $137,600) 4) Net Profit Percentage 5) Return on Owner's Equity (12% marks) (22% marks) (5% marks) d) In November of 2020, merchandise valued at $20,000 was sold to Maria Palmer on account. In April 2021, management decided to write-off Palmer's account as uncollectible, after repeated effort to collect from her. On May 25, 2021, Ja-Beau received $14,000 cash from Palmer, along with a letter apologizing for being late. Assuming that management decided to continue doing business with Palmer, briefly expiain the steps necessary in recording this collection. What impact would this transaction have on the accounts receivable and the net receivables of the business? (4% marks)