You are the auditor of Maglite Services Inc., a privately owned full-service cleaning company following ASPE. It is undergoing its first audit for the period ended September 30, 2020. The bank has requested that Maglite have its statements audited this year to satisfy a condition of its debt covenant. It is currently October 21, 2020, and the company's books have been closed. As part of the audit, you have found the following situations: 1. Despite having high receivables, Maglite has no allowance for doubtful accounts, and cash collections have slowed dramatically. Unfortunately, Maglite is owed $5,900 by Brad's Fast Foods at the end of fiscal 2020. Brad's has received substantial media attention during the past year due to Department of Health investigations that ultimately resulted in the closure of the company's operations; the owner has apparently moved to the Bahamas. No adjustment has been made for this balance. Maglite's management estimates that an allowance for doubtful accounts of $55,460 is required. During the 2020 fiscal year, the company wrote off $44,840 in receivables, and it estimates that its September 30, 2019 allowance for doubtful accounts should have been $35,400. 2. Maglite's only capital asset on its books is an advanced cleaning system that has a cost of $41,300 and a carrying amount of $24,574. Maglite has been depreciating this asset using the capital cost allowance used for tax purposes for the two years prior to its year ended September 30, 2020, at the rate of 30%. Useful life at the time of purchase was estimated to be 10 years. Maglite would like to change to a straight-line approach to provide more relevant information to its statement users. Management anticipates that the asset will continue to be of use for four years after the September 30, 2020 year end and will have no residual value. Because the company's accountant was uncertain about how to deal with the change, depreciation expense has not been recorded for the fiscal year. 3. Maglite purchased equipment at the beginning of the fiscal year and immediately expensed its $3,600 cost to the account Office Expense. Upon questioning, one of the owners said he thought the equipment would likely not need to be replaced for at least two more years. 4. You notice that there are no supplies on the statement of financial position. Company management explains that it expenses all supplies when purchased. The company had $1,770 of cleaning supplies on hand at the end of September 2020, which is about $590 higher than the balance that was on hand at the end of the previous year. 5. This year, Maglite started to keep a small amount of excess cash in trading investments that are bought and sold on the local stock exchange. At the end of September 2020, the fair value of this portfolio was $17,700 and the carrying value of the investments was $14,160 (which represented the cost of the investments). Assuming that the company's books are closed, prepare any journal entries that are required for each of the transactions. Ignore income tax considerations. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit 1. 2. 3. (To record correction of purchase of equipment) (To record correction for depreciation expense) 4. 5. Assuming that the company's books are open, prepare any journal entries that are required for each of the transactions. Ignore income tax considerations. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit 1. 2. (To record correction for depreciation expense.) (To record depreciation expense) 3. (To record correction of purchase of equipment) (To record depreciation expense) TU 4. 5. (To record depreciation expense) I M