Posted: March 29th, 2022
Northwest Flights (NWF) is a regional airline that services most cities in the Northern Ontario, Canada. The company began in 2007 when three friends (Joe, Jack, and John) felt that Northern Ontario was an underserviced market. Joe, Jack and John each own one-third of all the issued common shares and exercise equal control over the company. After their start-up phase, management began to expand their services lines. Currently, NWF offers only short haul flights to and from Thunder Bay. However, NWF has planned an expansion of operations into the rest of Ontario as they received approval to fly into both Toronto’s Pearson Airport. NWF plans to offer their first flights into Toronto Ontario in early 2022.
In to service the new routes into Ontario, NWF purchased a new airplane for $1,000,000. NWF obtained a 10-year mortgage from the Bank of Sydney in to finance the acquisition of the plans. The terms and agreement of the mortgage can be found in Exhibit I.
Jack, who is responsible for the accounting functions of the company, has always prepared the financial statements for internal reporting purposes. The balance sheet, as at December 31, 2020, is included in Exhibit II.
As a result of the new bank loan, the financial statements must now be audited. As a result, NWF has hired Lebeau and Liang LLP (L
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