Westcorp $($WC$)$ is a mid$-$sized residential construction firm located in the Okanagan Valley of British

Columbia which was founded in the early $2000$s$.$ While WC started out as a small family firm, it has grown

rapidly over the past six years and now has approximately $140$ employees at any one time. WC has two

divisions, one which does multi$-$family building construction including townhouses and apartment

buildings. The other division does residential renovation jobs for indiear.

$$ We are confident that this division will be sold at a gain based on our preliminary discussions with

the buyer.

BUAD $263$ Case Project Winter $2024$

$$ Graham Moir, $2023$

Appendix II

Aged Accounts Receivable Analysis

Construction Division

Renovation Division

Notes:

$1.$ The government of Canada has always been late in paying their bills due to the size of their

bureaucracy. Amounts are usually paid at the $120$ days mark; however, they have let us know that

$$162,000$ of the amount outstanding more than $90$ days will not be paid due to some deficiencies

in our work. Due to the size of the Government of Canada as a customer, we will not proceed with

any further attempts to collect that amount.

$2.$ $$95,000$ of the balance due from BC Housing is being disputed and we$$re unsure if or when this

balance will be received.

BUAD $263$ Case Project Winter $2024$

$$ Graham Moir, $2023$

Appendix III

Notes from the Former Bookkeeper

$1.$ To make things simple, I record all invoices directly into revenue. At September $30,2023$ we had

future customers that had paid $$138,000$ in deposits for work to be complete during the $2024$

fiscal year.

$2.$ Most of our insurance policies are paid month to month to help smooth our monthly cash flows.

One of our construction division insurance policies was paid in full up front and it runs from April

$1$ to March $31$ and cost of $$130,000.$ I expensed the full amount.

$3.$ During the $2023$ fiscal year, WC was on a principal holiday for its long$-$term debt, meaning no

principal payments were required. Interest did accrue during the year at $8\mathrm{.}75\%,$ but I didn$$t have

time to record the entry before being transferred.

$4.$ During $2023,$ one of our construction customers asked us to do something we haven$$t done

before. In addition to building an apartment building, they asked us to cover the building

maintenance on a separate building over a period of two years. We agreed as this helped us gain

the construction portion of the contract. Construction of the building was finished by the end of

the fiscal year, but the two$-$year maintenance contract extends to the end of June $2025.$ The total

value of the contract was $$850,000$ and WC$$s management estimates that a similar maintenance

contract would be sold for approximately $$165,000$ and the standalone construction would have

been $$685,000.$ We have done separate maintenance contracts as a standalone service in the

past. As of now, the full $$850,000$ is recorded as revenue for the $2023$ fiscal year.

$5.$ WC is subject to a tax rate of $32\%.$ You will need to record the intra period tax allocation.

BUAD $263$ Case Project Winter $2024$

$$ Graham Moir, $2023$

Appendix IV

Unadjusted Trial Balance

Cash $5,218,520$ Short$-$term investments at FV$-$OCI $534,010$ Accounts receivable $5,979,600$Accounts receivable $-$ Renovation $177,050$Note receivable $42,955$ Allowance for doubtful accounts $(93,000)$ Allowance for doubtful accounts $-$ Renovation $(17,000)$

Inventory $319,500$ Prepaid expenses $-$ Equipment $2,050,590$ Accumulated depreciation $-$ Equipment $(1,138,657)$ Equipment $-$ Renovation $97,895$ Accumulated depreciation $-$ Equipment $-$ Renovation $(43,770)$ Building $1,963,000$ Accumulated depreciation $-$ Building $(68,730)$

Land $430,000$ Accounts payable $(1,487,500)$ Interest payable $-$ Taxes payable $-$

Dividends payable $(55,000)$ Unearned revenue $-$

Long$-$term debt $(2,568,000)$ Common shares Note $1(500,000)$

Preferred shares $(750,000)$

Opening accumulated OCI $(16,200)$ Opening retained earnings $(9,388,241)$ Dividends Note $255,000$Unadjusted Trial Balance

As at September $30,2023$

Westcorp

BUAD $263$ Case Project Winter $2024$

$$ Graham Moir, $2023$

Appendix IV $($Cont$.)$

Unadjusted Trial Balance

Revenue $(19,632,425)$ Revenue $-$ Renovation $(3,078,475)$ Investment income $-$ OCI $(4,200)$ Gain $($loss$)$ on disposal $-$ Interest revenue $-$

Cost of goods sold $13,886,372$ Cost of goods sold $-$ Renovation $1,941,578$ Salaries and wages $3,985,198$Salaries and wages $-$ Renovation $889,112$ Insurance $212,500$Insurance $-$ Renovation $21,500$ Interest expense $-$ Rent $125,000$ Bad debts $($recovery$)-$

Depreciation $341,523$Depreciation $-$ Renovation $25,619$ Repairs and maintenance $79,147$Repairs and maintenance $-$ Renovation $17,313$Professional fees $58,735$Office expense $162,800$ Office expense $-$ Renovation $3,600$ Other operating expenses $223,081$Tax expense $-$ Construction $-$ Tax expense $-$ Renovation $-$

Tax expense $-$ OCI $-$

Note $1-$ On October $1,202230,000$ common shares were issued for $$10$ each to

management team members. On September $30,2023,$ a total of $160,000$ shares

were outstanding.

Note $2-$ Dividends declared on preferred shares.