Case on accounting frame work and financial statement

Case on accounting framework and financial statement

Case – Mark Wilson
Mark Wilson resigned from his corporate job on December 15, 2021, to start his sole
proprietorship, called Wilson’s Consulting. He started on January 1, 2022. He employed three
employees to get started. He was handling the accounting/administrative functions on his own
but soon realized that he needed assistance, so he invited applications for an accounting
assistant. He interviewed several applicants on May 15, 2022, and decided on employing Sharon
Mighty, who came highly recommended by an associate. Sharon had a human resource diploma
with very little training in accounting, but she had a vibrant personality and was a team player.
Sharon was responsible for recording all transactions and extracting the financial reports from
the previous records and noted that the Trial balance was not balancing. These records need to
be reviewed prior to being sent to the Tax accountant for tax purposes. The external accountants
charge by the hour, so Mark had indicated to Sharon, that a clean and correct set of reports (Trial
Balance, Income Statement, Statement of Owners Equity and a Balance Sheet) would minimize
the level of work required by the accountants and therefore minimize the cost. He had also
requested that all reports be approved by him prior to being sent to the accountants.
On January 28, 2023, Sharon extracted and sent the following trial balance to Mark for his
review.
Wilson’s Consulting
Trial Balance
As at December 31, 2022
Accounts
Dr
Cash
68,000
Short Term Investments
17,000
Accounts Receivable
24,000
Cr
Allowance for Doubtful Accounts
7,000
Supplies
6,500
Inventory
27,300
Prepaid Expense
Land
2,500
125,000
Buildings
190,000
Accumulated Depreciation – Buildings
Equipment
35,000
90,000
Accumulated Depreciation – Equipment
20,000
Accounts Payable
14,600
Bank Loan
28,700
Unearned Revenue
5,300
Notes Payable (Due August 1, 2023)
76,000
Mortgage Payable
200,000
Capital
60,000
Sales Revenue
266,000
Cost of Goods Sold
84,300
Rent Expense
15,000
Salaries Expense
25,300
Travel Expense
10,200
Maintenance Expense
9,700
Utilities Expense
7,800
Interest Expense
Depreciation Expense
Total
1,200
8,800
*702,400
*Out of balance and you must correct/re-arrange accounts as needed.
*722,800
Required
You are required to prepare an 8-page report for Mark Wilson. Included in this report should be
the corrected Trial Balance, the income statement, the statement of owner’s equity, and the
Balance Sheet (must use the Classified Reporting format (see the next page below here for a
sample). The accounting framework (at least one relevant principle) should also be discussed in
terms of any areas of concern being highlighted. Your case report must be in the format outlined
in Case #1 Rubric .
Must follow this Sample Balance Sheet (Classified Format):
HRM
Case #1 – Name of Case
G #1
Due date: May , 2024
Executive Summary
This section should be able to stand alone. If I have no time to read anything but the executive summary, I
should be able to discern the problem you’re addressing, the challenges you faced and the recommended
solution, in a matter of one (half page) paragraph Remember, you are writing this summary AFTER you
have completed the entire assignment.
Page 1 of 7
Findings
Briefly explain what a Trial balance is (one brief paragraph. Then, list all errors/findings from the Trial
Balance provided.
Page 2 of 7
Case Evaluation
This is where you perform your analysis and lay the basis for the solutions. In this case, briefly explain
what a corrected trial balance should show (in one short paragraph. Then, present the corrected Trial
Balance using proper accounting format as we discussed/per e-book.
Page 3 of 7
Proposed Solution
Present Income Statement using proper accounting format as discussed/per e-book.
Page 4 of 7
Present Statement of Owner’s Equity using proper accounting format as discussed/per e-book.
Recommendations
Present Balance Sheet using proper accounting format as discussed/per e-book.
Page 5 of 7
Implementation
In one paragraph, talk about the strategy that you should choose (importance of accurate accounting).
Page 6 of 7
In another paragraph, explain why this choice is the most appropriate in terms of compliance to at least
one specific accounting principle.
References
Look at the References help document I provided. You must get this exactly as advised.
Page 7 of 7