Solving The Financial Issues Of Watering Can Inc. Essay

Decent Essays

Watering Can Inc.

To: Melanie
From: Serena Son, CPA, Director of Accounting

RE: SOLVING THE FINANCIAL ISSUES OF WATERING CAN INC. My role as a director of accounting is to help you, Melanie, with identifying the significant weakness in the company’s internal control, when to recognize the revenue, how to manage the inventory efficiently, and how to make allowance for bad debt accounts. Based on every issue that is addressed above, I will make recommendations for improvements and solutions.

USERS & OBJECTIVES There are 4 users who are using the financial statement of the Watering Can Inc.: Melanie and Jack Parkers, Sam Penn, and the Small Bank. Users are those who rely on financial statements to make decisions and their objectives are the financial reporting goal, the user strive to achieve. Melanie is the one of the sole owners of Watering Can Inc., and the primary user of the company’s financial statement. Her biggest interest is whether herself is booking the financial statement correctly, whether or not the internal control within the business is fully secured. Also, as the owner of the company, her major interest is to minimize the company’s net income, in order to pay the minimum interest to Sam and the Small Bank, under the legal constraints. Jack Parkers, the husband of Melanie, has the same interest as Melanie of minimizing the net income, as another owner of the Watering Can Inc. Sam, the Jack’s uncle, has invested $100,000 in the Watering Can Inc., and

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