The Controller of IPSshowed you the most recent draft financial statements (Balance Sheet, IncomeStatement, and Statement of Cash Flows). He admitted that major transactions had not been entered. Your task is to correct the financial statements.Apparently, the following three events were missed when preparing the financial statements:
1 A write-off of an Accounts Receivable amount of $1.5 million: The party which owed this amount went bankrupt. IPS does not expect to retrieve any of the amount owed.
2 IPS sold aProperty, Plant, and Equipment asset valued at $5 million for cash, which generated a profit of $2.1 million.
3 IPS gave a 10 percent discount to a customer. This discount was not recorded, reducing the revenues of the goods sold to the customer from $8 million to $7.2 million.
Question 4: Calculate the impact of the missing transactions on the major financial statements: the
1. Balance Sheet,
2. Income Statement,
3. Statement of Cash Flows.
Which elements in the financial statements change and by how much?
Once you have completed your calculations, combine your responses to the questions and the supporting data into a single report on the financial viability of IPS.
Before starting your calculations, review materials on the preparation of financial statements.
Submit your Financial Viability of IPS Report and Calculations to the dropbox below. Be sure to show your calculations in Excel and provide a narrative analysis in PowerPoint. Your narrative analysis should summarize the results of your analysis and make recommendations for the benefit of the company.