RU Financial Accounting Candies Galore Discussion

Scenario

You are the owner of a full-service bookkeeping firm. A new client, Sandy Sweet, comes to you with her accounting files and records and needs help finding and correcting errors. She started a new business, Candies Galore, and decided to do her own bookkeeping. This was more than she could handle along with opening and running the business. She is ready to hire you as the full charge bookkeeper and has brought all of her records to you.

The following is a narrative of the first month’s transactions. Her accounting records are linked here: Candies Galore accounting records.

April 1. The owner invested $10,000 in the company, resulting in her receipt of Common Stock.

April 2. The owner purchased a computer, shelving, and old-fashioned candy jars for $3500 on the account. She got a 12 month no interest credit arrangement and will make monthly payments to the supplier. You decide this will all be equipment.

April 3. The owner set up a credit account with a wholesale candy company for inventory, and purchased supplies and candy for $1200 on account. The owner will make a payment for this at month end. The owner appropriately debited inventory for this amount

April 4. The owner purchased a desk chair from a department store for $250, paying cash. This is equipment.

April 7. The owner paid for the development of a logo and other advertising materials for the candy shop. She had them printed and had her car painted with the new logo. The owner paid $500 cash for the advertising and appropriately expensed it in the current month.

April 8. The owner negotiated a business transaction with a local high school Booster Club to provide candy for football games. The Booster Club paid $200 down to be used against the first month’s bill. The owner will bill the Booster Club monthly based on the candy purchased. (Hint: This means the owner has an obligation to either provide candy or give the money back.)

April 9. The owner sold candy and was paid cash of $150 through the store register.

April 12. The owner sold candy and was paid $400 cash through the store register.

April 14. The owner sold candy to a local business and billed them $500.

April 22. The owner signed a contract with a social media company to manage her social media accounts. She paid $200. This is a prepaid asset. (Hint: This transaction will use the two following accounts–Cash and Prepaid Advertising. You need to decide how they will be affected.)

April 23. The owner also hired a company to design and set up a website, email account, etc. for her company. She paid $240 to register everything and will expense $20 per month against this amount. (Hint: The owner is paying for advertising for a full year today, but will only “use up” $20 of that amount each month–the $20 figure is related to one of the adjusting entries below, and will not be used in this transaction. It is extra information for now.)

April 24. The owner wrote a check to herself to cover her rent and car insurance for $1,200. (Remember, when the stockholders receive money from the business, it is called a dividend. The owner doesn’t get to call her personal rent and car insurance business expenses–that would be a violation of the business entity concept.)

April 30. The owner made her first monthly payment on the equipment she purchased on April 2, $292. (Hint: This is one of the previous charges she made, which she is now paying on account.)

April 30. The owner made a payment for inventory to the wholesaler of $75. (Hint: This is one of the previous charges she made, and she is now making a payment on account.)

April 30. The owner received a check from the local business for $250 in partial payment of the invoice sent to them on April 14th.

April 30. The owner billed a local bakery for candy sold to them, $1,125. The bakery will be ordering more candy in the future. (This is a new client who has not paid in advance. Treat this as new billing to a customer for services performed.)

Month End Adjusting Entries

The depreciation on the equipment is $104.

The inventory on hand at the end of the month is $150 (the owner uses a perpetual system and FIFO costing).

The social media company sent an invoice stating $175 is left in the owner’s prepaid account. (Hint: Of the $200 that she had in the PPD social media account, $25 has now been used).

The monthly amount for the website and email account must be expensed. (Hint: Refer to the original entry above for the amount per month to be expensed–remember, she originally paid $240 for these services, now she has used up one month of the service).

The owner determined she sold $1,000 worth of candy to the booster club. (Hint: Refer to the entry for clues about what she needs to do in the entry for the restaurant–they have already paid her $200. This entry will affect THREE accounts.)

Instructions

There are accounting conceptual errors and quantitative/formatting errors in the bookkeeping records of Candies Galore. Find the errors and trace them back to the source transaction. In a Word document, present the following information in a professional manner to the owner of Candies Galore. Use a copy of the Excel document when you make the quantitative and formatting corrections.

Make a listing of each error along with the correction needed. Use accounting principles and concepts to support the corrections needed.

For each error discuss an internal control procedure that would help prevent the error from happening in the future. Use COSO (Committee of Sponsoring Organizations of the Treadway Commission) standards to support your discussion.

Discuss options on how the owner should handle accounts receivables and uncollectible accounts in the future. Use GAAP (Generally Accepted Accounting Principles) guidelines and research to support your discussion.

Turn in your highest-quality paper
Get a qualified writer to help you with

“ RU Financial Accounting Candies Galore Discussion ”

Get high-quality paper

NEW! AI matching with writer

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order