Juggling Jim's Showcase is a circus shop run by your cousin, Jim. He is at the end of his first year in business and he has heard that you have been studying accounting. Jim once took an accounting course himself, but he failed his exams and so he asks you to help him produce some accounts. He has employed a clerk to write up his books which were kept correctly. Jim then prepared the following trial balance which he cannot get to balance. He asks you to help him see where he has gone wrong. Jim's Trial Balance Premises Accumulate depreciation on premises Fixtures and fittings Accumulated depreciation on fixtures and fittings Vans Accumulated depreciation on vans Inventories at end of year Closing trade receivables Closing trade payables Bank balance (overdraft) Capital Profit for the year Loan € 150,000 40,000 4,000 20,000 2,000 12,000 10,000 2,000 240,000 € 3,000 48,000 50,000 39,000 160,000 300,000 You ascertain the following further information: A van costing €6,000 with accumulated depreciation of €600 was sold for €4,500 cash just before the year-end. This transaction has not yet been reflected in the company's books. Required (a) Produce two corrected trial balances for Jim, one before and one after incorporating adjustment for the note. Show workings using T accounts.

Helen Hernandez, president of Double H Enterprises, applied for a $175,000 loan from Great Nations Bank. The bank requested financial statements as a basis for granting the loan. Helen instructed her accountant to provide the bank with a balance sheet, but to omit the other financial statements because her business incurred a net loss last year.   Helen contends that as the owner of the business, it is her right to withhold certain financial statements from the bank.  Do you agree with Helen? Why or why not?  What type of information would banks require from a loan applicant and why would the loan officer request this information?

You have recently been hired by Davis & Company, a small public accounting firm. One of the firm’s partners, Alice Davis, has asked you to deal with a disgruntled client, Mr. Sean Pitt, owner of the city’s largest hardware store. Mr. Pitt is applying to a local bank for a substantial loan to remodel his store. The bank requires accrual based financial statements but Mr. Pitt has always kept the company’s records on a cash basis. He does not see the purpose of accrual based statements. His most recent outburst went something like this: “After all, I collect cash from customers, pay my bills in cash, and I am going to pay the bank loan with cash. And, I already show my building and equipment as assets and depreciate them. I just don’t understand the problem.Mr. Pitt has relented and agrees to provide you with the information necessary to convert his cash basis financial statements to accrual basis statements. He provides you with the following transaction information for the fiscal…

Delia Alvarez, the owner of Delia's Lawn Service, wants to borrow money to buy new lawn equipment. A local bank has asked for financial statements. Alvarez has asked you to prepare financial statements for the year ended December 31. You have been given the unadjusted trial balance on page 175, and you suspect that Alvarez expects you to base your statements on this information. You are concerned, however, that some of the account balances may need to be adjusted. In your post, write how you would explain to Alvarez what additional information you need before preparing the financial statements. Alvarez is not familiar with accounting issues. Therefore, explain why you need this information, the potential impact of this information on the financial statements, and the importance of making these adjustments before approaching the bank for a loan.