Please help answering questions 4 to 9 You are the accountan

Please help answering questions 4 to 9.

You are the accountant at CPA, LLP. Your client, Coastal Corp, is a retailer of watei sports equipment. They have provided their financial data and you are responsible f creating their 2018 fiscal year financial statements. Below is their end of year data, i millions, alphabetized Account Accounts pavable Accounts receivable Accumulated depreciation: office equipment Additional paid-in capital (common stock) Bonds payable (due November 30, 2021 Cash Common stock (1,800 shares, $10 par value Cost of goods sold Deferred income taxes Depreciation expense: office equipment Insurance expense Land Merchandise inventor Notes payable (due September 30, 2018 Office equipment Office supplies Office supplies expense Preferred stock (250 shares, $20 par value) Premium on bonds payable Prepaid rent Rent expense Retained earnings (January 1,2018 Salaries expense Sales Sales returns and allowances Sales taxes pavable Treasury stock (100 common shares Utilities expense Income Tax Expense Balance $12,750 2,600 12,000 13,000 22,500 19,200 18,000 100,575 5,750 2,750 520 39,500 17,500 2,500 41,000 900 900 5,000 1,750 1,800 4,520 21,050 88,095 226,000 2,500 3,200 2,250 5,700 8,190

Solution

Answer 4

While preparation of the statement of cash flow Indirect method is the most appropriate method as it is Internationally accepted. But in this case we have to use Direct method as the Comparative Balance sheets and other required data is not presented.

I will need the closing balance of retained earnings and Opening Cash balance.

Answer 5.

Those incidents which provide additional information pertaining to a company\'s operation and Financial position and are considered a part in Financial statement should be included in the Notes to Financial statement.

The two notes are

I. Due to the tornado in Kansas city four employees were injured and they are suing the company. There is a possible probability that the company may loose the case and has to bear $1-2 mn per employee over and above the insurance claims.

ii.The Company has closed 12 stores in owned building due to strategic financial plan implementation .

Answer 6.

Of the information provided above the two most concerning for me is

I. The closure of 12 stores in owned building and sell of buildings. As the part of plan only leased items will be used but the future value of the owned items should have been considered before opting for a lease.

Also taking a long term lease for 12 stores will involve a huge investment.

ii. The likelihood of loosing the case against the injured employees. As there is a greater probability of the company to loose the case against the employees the matter which should be of concern is the loss which the company have to incurre. Over and above the insurance claims the conpcom will loose $4-8 mn.

Answer 7.

After reviewing if I found out that certain amount may not be received from the Accounts then I need to know that what percentage of the Receivable they are going to pay back. Accordingly I\'ll provide a reserve for the doubtful amount.

To create a reserve I will debit Allownance for Doubtful Debt and credit Accounts Receivable.

As per Chegg policy I\'ve answered first 4 questions including any subparts.