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Fun for Kids

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Submitted By maxneo553
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Fun4Kids Inc
Financial statements and bookkeeping should be audited in order to ensure that they are free of misstatement and are in compliance with GAAP, since Martha’s cousin does not have any formal training in accounting. This is due to the fact misstatements and compliance issues are much more likely to occur.
Annemarie and Jacques also need to consider the risk of the brands that Fun4Kids Inc. carries. Although they are in good standing now, if they were any additional boycotts were to happen. They may be forced to write of the inventory.
The goal for Anne Marie and Jacques in this case is net asset minimization since the purchase price is derived off of net assets. If they were to purchase the entity they should hire a new bookkeeper with education and experience in accounting
PackagedParty Inc
PackagedParty Inc should recognize revenue when inventory is sold not when inventory is received because other than receiving the inventory none of the revenue earning process is made. As well they receive volume discounts depending how much they purchase from their suppliers. If they recognize the revenue too early there will be less uniformity in the financial statements.
Heat and electricity, wages should be expensed under different accounts. This reversal will not make the expenses understated.
Raw materials for the statuettes should be purchased when the prices are considered relatively low in order to hedge against price increases. Any thrown out pieces should be written off with normal and abnormal spoilage accounts. As well they should stop producing the statuettes all together since they are losing money overall on this segment of the business. [(20 + 25) x $2000 – $367,700= -$277,000]
In conclusion, Annemarie and Jacques should attempt to purchase PackagedParty Inc and not Fun4kids. Although Fun4kids has a higher net income they have been only

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