While comparing the current and prior year inventory schedules you noted that several products had approximately the same quantities. Upon further investigation you determined that the items had very little or no activity during the year. The inventory in question had a recorded value of $52,000. Upon discussions with sales and warehouse personnel, you learned that the items were prior versions of products, and were no longer offered for sale in the product catalog. You were also told that they will probably be thrown out rather than be sold through alternative distribution channels. EARNINGS MANAGEMENT AND FRAUD PROJECT ACCT 312: Spring 2020 You have just been hired as the controller for Wholesale Corp. The last controller left suddenly. The day after you started work, the president of the corporation called you into the office to discuss a preliminary draft of the December 31, 2019 financial statements. The statements reported a net operating loss of $21,000. The president was quite upset and wanted to know what you could do to "make them look better." The president was planning to go to the bank to discuss obtaining a new line of credit and was afraid that the request would be turned down because of the loss. You responded that you would check things out and see what you could do. (Hint: Things might get much worse) In the course of your account analysis, you became aware of several issues. Please complete the following project for the year ended December 31, 2019. (Do not prepare any descriptions or journal entries that should be made for January 2020) Part 1: Prepare any necessary adjusting journal entries and determine the effect of cach entry on net income (record in the format noted below). The income (loss) per the trial balance and the effect of the adjusting journal entries should be totaled after the last entry This project must be typed. I strongly suggest that you show me your journal entries and the related effects on income before handing in the project. Note: The company uses the periodic inventory method. Again, only address what should be done for the year-ended December 31, 2019, DR CR Effect on net income (21,000) AJE +/- amount by line Description Income per trial balance Acct name Acct name ** Reminders: Only income statement accounts affect income. A DR to any income statement account will reduce income. A CR to any income statement account will increase income. nge 13ense 20 arid Teland Itilities: Datinad While comparing the current and prior year inventory schedules you noted that several products had approximately the same quantities. Upon further investigation you determined that the items had very little or no activity during the year. The inventory in question had a recorded value of $52,000. Upon discussions with sales and warehouse personnel, you learned that the items were prior versions of products, and were no longer offered for sale in the product catalog. You were also told that they will probably be thrown out rather than be sold through alternative distribution channels. EARNINGS MANAGEMENT AND FRAUD PROJECT ACCT 312: Spring 2020 You have just been hired as the controller for Wholesale Corp. The last controller left suddenly. The day after you started work, the president of the corporation called you into the office to discuss a preliminary draft of the December 31, 2019 financial statements. The statements reported a net operating loss of $21,000. The president was quite upset and wanted to know what you could do to "make them look better." The president was planning to go to the bank to discuss obtaining a new line of credit and was afraid that the request would be turned down because of the loss. You responded that you would check things out and see what you could do. (Hint: Things might get much worse) In the course of your account analysis, you became aware of several issues. Please complete the following project for the year ended December 31, 2019. (Do not prepare any descriptions or journal entries that should be made for January 2020) Part 1: Prepare any necessary adjusting journal entries and determine the effect of cach entry on net income (record in the format noted below). The income (loss) per the trial balance and the effect of the adjusting journal entries should be totaled after the last entry This project must be typed. I strongly suggest that you show me your journal entries and the related effects on income before handing in the project. Note: The company uses the periodic inventory method. Again, only address what should be done for the year-ended December 31, 2019, DR CR Effect on net income (21,000) AJE +/- amount by line Description Income per trial balance Acct name Acct name ** Reminders: Only income statement accounts affect income. A DR to any income statement account will reduce income. A CR to any income statement account will increase income. nge 13ense 20 arid Teland Itilities: Datinad