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Manju Furniture Co. was established in the Kingdom of Bahrain and has been operating for several years. The showroom located in Manama displays a variety of home furniture and accessories specifically designed for the comfort of homeowners. Manju Furniture adopts the calendar year as its fiscal year. Manju Co is in the process of preparing their financial statements for the year ended December 31, 2022. A trial balance along with several business-related appendices are presented below:

Manju Furniture Co.

Unadjusted Trial Balance

December 31, 2022

	Debit BD	Credit BD
Cash	56,193
Accounts receivable	123,200
Allowance for Doubtful Accounts		5,300
Inventory, January 1, 2022	68,000
Supplies	6,620
Prepaid insurance	3,000
Prepaid rent	1,300
Purchases	120,000
Notes receivable (short-term)	15,000
Land	478,738
Equipment	220,000
Accumulated depreciation Equipment		127,188
Buildings	95,000
Accumulated depreciation Buildings		15, 200
Accounts payable		20,000
Salaries payable		12,000
Unearned revenue		45,000
Loan		320,000
Capital		603,903
Withdrawals	3,100
Sales Revenue		111,000
Repairs and maintenance expense	11,230
Salaries expense	55,200
Advertising expense	2,000
Utilities expense	1,010

Totals

1,259,591

1,259,591

SUBJECT: INVENTORY ISSUES:

During the internal audit at year -end, we noted that the following with regards to inventory: - The company purchased additional merchandise that total to BD120,000 during the year. The aggregate purchases amount was verified and included in the unadjusted trial balance. - The ending inventory value of BD87,400 was initially calculated based on the inventory count conducted at year-end however the company did not include in the count purchased goods of BD12,000, which were in transit (terms: FOB shipping point). Also, the company did not include in the count inventory that had been sold with a cost of BD13,200, which was in transit (terms: FOB destination). - The company included in the inventory goods held on consignment for Road Co., costing BD14,500. - The company is using periodic inventory system & FIFO cost flow assumption consistently.

SUBJECT: AGING ACCOUNTS RECEIVABLES:

In response to your inquiry about receivables, please note the following: On December 31, 2022, the companys Allowance for Doubtful Accounts has an unadjusted credit balance of BD5,300. The company prepares a schedule of its December 31, 2022, accounts receivable by age. On the basis of past experience, we estimated the percent of receivables in each category that will become uncollectable. This information is summarized here:

December 31, 2021 Accounts Receivable	Age of Accounts Receivable	Expected Percent of Uncollectable
BD49,000	Not yet due	1.25%
BD33,000	1 to 30 days past due	2.00%
BD12,000	31 to 60 days past due	6.50%
BD9,500	61 to 90 days past due	32.00%
BD13,000	Over 90 days past due	68.00%

LOAN AGREEMENT This Loan Agreement dated December 1, 2022, Between: Company Aid Bank (the Lender) AND Manju Co (the Borrower) :

The parties agree as follows: Loan Amount: The lender agrees to grant loan of BD250,000 to the borrower. Loan term: Monthly loan payment of BD2,300 over ten years, of which BD300 is an interest payment and BD2,000 is a principal payment. First payment is due in January 2, 2023. This agreement has been signed by both parties.

SA DIGITAL SOCIAL MEDIA MANAGEMENT PROPOSAL Date: December 15, 2022 Client Name: Manju Co Validity: 30 days from proposal date.

DELIVERABLES:

The following services and deliverables will be provided by SADigital and are classified as in-scope:

Starter Plan 10 posts per month

10 stories per month

Instagram channel

Professional photography and graphic design

Content planning and creation (English and Arabic)

12 months contract

Start date: 01-January-2022

End date: 01-January-2023

Note: Any applicable add-ons and extras indicated in the costing table below.

ANTICIPATED COSTS:

Item	Monthly Cost (BD)
Starter Plan (as per Social Media Rate Card 2022)	370
Social Media Boosting Setup	50
Subtotal Discount	420 (100)
Tota	320

MERCURY CONSTRUCTION INVOICE:

TO: Manju Co Showroom 312 Manama POBOX 12M1

FOR: Showroom annual maintenance

DESCRIPTION	HOURS	AMOUNT
Placement of reinforcement steel	4	240
Concrete formworks for footings	3	150
Placement of bespoke epoxy flooring	2	500
Placement of wall cladding in showroom & offices	6	480
Painting of showroom	5	350
Total		1,720

Make all checks payable to MERCURY CONSTRUCTION Total due in 15 days. Overdue accounts subject to a service charge of 1% per month.

Land is subject to revaluation. They are valued on a market value basis by external valuators at the statement of financial position date. The revaluation reserve measures the amount by which lands are recorded above historical cost. There was no material variance between the historical cost and market value as of December 31, 2021. - Buildings, acquired five years ago, are accounted for using the cost model. The buildings are depreciated on a straight-line basis assuming a 25-years life and no salvage value.

- Equipment, acquired eight years ago, are accounted for using the cost model. The equipment, with an estimated useful life of eight years and BD10,000 salvage value is deprecated using the double-declining balance method.

New Message: Dear Accountant, Please make sure the following items are appropriately reflected on the year-end financial statements: 1. One-third of the performance obligation related to cash received in advance from customers is satisfied. 2. Salaries of BD7,200 are earned by workers but not paid as of December 31, 2022. 3. A physical count of supplies shows BD900 of supplies available. 4. An analysis of insurance policies shows that BD750 of unexpired insurance benefits remain at December 31, 2022. 5. The balance in the prepaid rent account represents rent for December 2022. Regards, Financial Controller.

Questions:

Assuming the role of the accounting team Manju Co.: A) Record the necessary adjusting and correcting journal entries for the year ended December 31, 2022.

B) Prepare schedules/tables and show all your workings and calculation for part A.

C) Prepare an accounting worksheet reflecting the related accounts, unadjusted trial balance, adjustments and adjusted trial balance for the year ended December 31, 2022.

D) Prepare a statement of profit or loss and a statement of owners equity for the year 2021, and a statement of financial position at December 31, 2022.

E) Prepare a memorandum to the owner of Manju Co. on the companys profitability and efficiency by computing and commenting on two ratios for each group.

F) Discuss how the qualitative characteristics of financial information apply to Manju Co. as it pertains to the companys financial accounting and reporting. Your discussion should include at least 4 possible illustrative accounting examples and references, where appropriate.

G) Discuss the accounting treatment of Value Added Tax (VAT) and the implication registration by Manju Furniture Co.

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