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Simulation 1: Narrative

1) You have been hired as a junior accountant to work for Plants from Paradise, a garden centre. Your tasks include reconciling the bank balance and preparing a cash forecast to assist with determining additional financing needs. 2) To reconcile the bank balance, you are given the book and bank balances as of December 31, 2021 along with reconciliation items. You must prepare the reconciliation and any related journal entries. 3) To prepare the cash forecast, you are given projected cash inflows and outflows for January 2022. The forecast will help answer the bankers' questions about the company's current and projected cash position and financing needs.

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Riza Estolonio
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265 views

Simulation 1: Narrative

1) You have been hired as a junior accountant to work for Plants from Paradise, a garden centre. Your tasks include reconciling the bank balance and preparing a cash forecast to assist with determining additional financing needs. 2) To reconcile the bank balance, you are given the book and bank balances as of December 31, 2021 along with reconciliation items. You must prepare the reconciliation and any related journal entries. 3) To prepare the cash forecast, you are given projected cash inflows and outflows for January 2022. The forecast will help answer the bankers' questions about the company's current and projected cash position and financing needs.

Uploaded by

Riza Estolonio
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Simulation 1

Narrative:
You have been hired as a Junior Accountant to work for Plants from Paradise (Plants) a
garden centre in the city of Victoria, BC. Your role reports directly to Plants' Controller Miranda
Cornell. Each week you are emailed a series of tasks that are Miranda has aligned to match
your current accounting class schedule. Each week tasks are laid out for you to assist Miranda
in both operations and accounting decision making. Miranda is hoping to help you see the
broader application that accounting has on operating a business and hopes that the weekly
tasks help to identify how accounting impacts operations.
Plants from Paradise reports under ASPE, and has a December 31, 2021, year end. All work
that you are preparing is for their financial statements dated as such.

Additional Information:
This week Miranda has been busy running around watering the plants as the greenhouses have
been quite warm. She thanks you for your patience as your onboarding must be self directed as
there are several customers that require attention.
Miranda mentioned there is a list of tasks she is hoping you can assist with and that all the
information you need to complete the tasks should be in this weeks folder!

Tasks List:
1. Reconcile the Bank Balance - Appendix A (19 marks)
2. Prepare simple Cash Forecast and respond to banker– Appendix B (14 marks)
Appendix A: Bank Reconciliation
Tasks:
1) Please prepare the bank reconciliation based on the following information (14 marks)
2) Please prepare any related journal entries (5 marks)

Bank Balance, December 31, 2021: $10,288


Book Balance, December 31, 2021: $11,255
Notes:
1) The bank statement included a charge (debit memo) of $150 for the monthly bank
services
2) The bank missed one $50 bill when processing a deposit.
3) Outstanding cheques as of December 31, 2021, were $688.00.
4) Deposits in transit as of December 31, 2021, were $2,550.
5) The bank statement included an NSF charge of $405.00 for a cheque received from a
customer.
6) A note receivable worth $1,500 was received into the company’s bank account on
December 31, 2021, from a customer on account that was not yet recorded.

Plants from Paradise


Bank Reconciliation
December 31, 2021

Add:

Less:

Add:

Less:
Journal Entry Template:

Entr Date Debit or


Account Name Amount
y# Credit
Appendix B: Cash Forecast / Bankers Questions

Note from Miranda: before you joined, I was in the midst of attempting to determine whether
Plants required additional financing. I had a call with our bankers to chat through some of their
questions, but I was unable to answer them all. They suggested completing a simple cash
forecast would help and they provided the template below. Can you please assist me in
completing the forecast and drafting answers to the outstanding questions?
Projected Cash Flows for January 2022:
1. Payroll (2 times, at $2,750)
2. Mortgage (1 time, at $3,500)
3. Sales projection (weekly, at $550)
4. Bills (end of month, $5,850)

Bankers Questions:
1) What is the current cash position of the company, and what do you anticipate having at the end of
the month? (2 marks)

2) Are you able to make next month’s mortgage payment? How much would you need to borrow? (2
marks)

Miranda’s Questions:
1) If we borrowed from a line of credit to fund 3 months of funding, how much should we ask for? (2
marks)

2) If the line of credit has an interest rate of 5.05%, what would the interest charge be if we took your
recommended amount (from question 1) for the 3 months period of January 1 – March 31, 2022.
(2 marks)
Cash Forecast Template (6 marks)
Plants from Paradise
Cash Forecast
December 31, 2021
Cash Balance, Reconciled
Add: Cash in-flows

Less: Cash out-flows

Projected Cash Balance

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