Chapter 4
Solutions
Exercise 4.1
| Account name | Classification |
|---|---|
| Preferred shares | Cap |
| Franchise agreement | IA |
| Salaries and wages payable | CL |
| Accounts payable | CL |
| Buildings (net) | PPE |
| Investment – Held for Trading | CA |
| Current portion of long-term debt | CL |
| Allowance for doubtful accounts | CA |
| Accounts receivable | CA |
| Bond payable (maturing in 10 years) | NCL |
| Notes payable (due next year) | CL |
| Office supplies | CA |
| Mortgage payable (maturing next year) | CL |
| Land | PPE |
| Bond sinking fund | LI |
| Inventory | CA |
| Prepaid insurance | CA |
| Income tax payable | CL |
| Cumulative realized gain or loss from an OCI investment | AOCI |
| Investment in associate | LI |
| Unearned subscriptions revenue | CL |
| Advances to suppliers | CA |
| Unearned rent revenue | CL |
| Copyrights | IA |
| Petty cash | CA |
| Foreign currency bank account or cash | CA |
Exercise 4.2
-
Aztec Artworks Ltd.
Statement of Financial Postion
As at December 31, 2021Assets Current assets Cash $143,000 Investments (held for trading at fair value 135,000 Accounts receivable $332,000 Allowance for doubtful accounts (12,000) 320,000 Inventory (at lower of FIFO cost and NVR) $960,000 Inventory on consignment 20,000 980,000 Prepaid expenses 30,000 Total current assets 1,608,000 Long-term investments: Investment in bonds (held to maturity at amortized cost) 200,000 Bond sinking fund 100,000 Land held for investment (at cost) 200,000 500,000 Property, plant, equipment Building under construction $220,000 Land (at cost) 220,000 440,000 Building (at cost) $1,950,000 Accumulated depreciation (450,000) 1,500,000 Equipment (at cost) 500,000 Accumulated depreciation (120,000) 380,000 2,320,000 Intangible assets: Patents (net of accumulated amortization for $9,000) 21,000 Total assets $4,449,000 Liabilities and Shareholders’ Equity Current liabilities Bank indebtedness $18,000 Accounts payable 370,000 Rent payable 120,000 Notes payable 300,000 Other payables 35,000 Income tax payable 80,000 Total current liabilities $923,000 Long-term liabilities Bonds payable (20 year 5% bonds, due August 31, 2025) 800,000 Pension obligations 210,000 1,010,000 Total liabilities 1,933,000 Shareholders’ equity Paid in capital Preferred, ($2, non-cumulative, participating-authorized 50,000, issued and outstanding, 20,000 shares) $900,000 Common (authorized, 900,000 shares; issued and outstanding 700,000 shares) 700,000 Contributed surplus 430,000 2,030,000 Retained earnings 326,000 Accumulated other comprehensive income 160,000 2,516,000 Total liabilities and shareholders’ equity $4,449,000 1Cash balance, Dec 31
Plus bank overdraft
Less bond sinking fund
Adjusted cash balance, December 31
$225,000
18,000
(100,000)
$143,000
2Account receivable, Dec 31
Plus AFDA
Plus credit balances to be separately reported
Adjusted balance, Dec 31
$285,000
12,000
35,000
$332,000
3Inventory, Dec 31
Plus inventory on consignment
Adjusted balance, Dec 31
Inventory, net realizable value, Dec 31
$960,000
20,000
$980,000
985,000
4Land, Dec 31
Less land held for investment
Adjusted land, Dec 31
$420,000
(200,000)
$220,000
5Balance, Dec 31
Plus accumulated depreciation
Adjusted balance, Dec 31
Building
$1,500,000
450,000
$1,950,000
Equipment
$380,000
120,000
$500,000
6Goodwill, Dec 31
Removed – internally generated goodwill
cannot be recognizedAdjust balance, Dec 31
$190,000
(190,000)
$ –
7Patents, Dec 31
Accum. amortization for 3 years ($30,000 ÷ 10 × 3)
$21,000
$9,000
Retained earnings = ($501,000 + $20,000 consignment inventory − $190,000 goodwill adjustment − $5,000 unrealized holding loss for trading investments) = $326,000 OR ($4,449,000 − 1,933,000 − 2,030,000 − 160,000) = $326,000
- Liquidity ratios
Current ratio = 1,608,000 ÷ 923,000 = 1.74
Quick ratio = (143,000 + 135,000 + 320,000 = 598,000) ÷ 923,000 = 0.65
Activity ratios
Accounts receivable turnover = 3,000,000 ÷ 320,000
= 9.38 times per year or every 38.9 days (365 ÷ 9.38)
Days’ sales uncollected = 332,000 ÷ 3,000,000 × 365
= 40.4 days
Inventory turnover = (3,000,000 × 60%) ÷ 980,000
= 1.84 times per year or every 198.4 days (365 ÷ 1.84)
Asset turnover = 3,000,000 ÷ 4,449,000
= 0.67 times
Comments:
In terms of liquidity, Aztec’s current ratio of 1.74 suggests at first glance that it can meet its short-term obligations. However, when inventory and prepaid expenses are removed, the ratio drops to .65, which is short of the general rule of 1:1 for quick ratios. This may mean that inventory levels are too high. The inventory turnover ratio below will confirm if this is the case or not.
Activity ratios, such as the accounts receivable turnover, measure how quickly ac- counts are converted into cash. For Aztec, accounts receivable are collected every
38.9 days on average. Looking at days’ sales uncollected, if a guideline of 30–40 days to collect is considered reasonable, then Aztec is close to the top end of the 40- day benchmark. Management would be wise to take steps to improve its receivables collections somewhat.Inventory turnover of every 200 days or so appears to be very low, which could mean that too much cash is being tied up in inventory or there is too much obsolete inventory that cannot be sold. A turnover ratio that is too high can signal inventory shortages that may result in lost sales. A turnover ratio for each major inventory category will help to determine if the situation is wide-spread or limited to a particular inventory category.
Asset turnover for .67 times appears low but without industry standard ratios to use as a comparison benchmark, ratios become less meaningful.
Exercise 4.3
-
Johnson Berthgate Corp.
Statement of Financial Position
As at December 31, 2021Assets Current assets Cash $131,000 Investments (held for trading at fair value) 120,000 Accounts receivable $330,000 Allowance for doubtful accounts (15,000) 315,000 Inventory (at lower of FIFO cost and NRV) 430,000 Prepaid expenses 6,000 Total current assets 1,002,000 Long-term investments: Investments in bonds (held to maturity at amortized cost) 190,000 Investment, FVOCI 180,000 370,000 Property, plant, and equipment Land (at cost) 170,000 Building (at cost) $660,000 Accumulated depreciation (110,000) 550,000 Equipment (at cost) 390,000 Accumulated depreciation (50,000) 340,000 1,060,000 Intangible assets: Patents (net of accum. amort. of $80,000 on a straight-line basis) 125,000 Franchise (net of accum. amort. of $45,000 on a straight-line basis) 115,000 240,000 Goodwill 30,000 Total assets $2,702,000 Liabilities and Shareholders’ Equity Current liabilities Accounts payable $350,000 Accrued liabilities 70,000 Commissions payable 90,000 Notes payable 60,000 Unearned consulting fees 13,000 Total current liabilities 583,000 Long-term liabilities: Bonds payable (20-year 5% bonds, due December 31, 2025) 655,684 Note payable (3%, 5-year, due December 31, 2024) 571,875 1,227,559 Total liabilities 1,810,559 Shareholders’ equity Paid in capital Preferred, ($3, non-cumulative, authorized 1200, issued and outstanding, 800 shares) $80,000 Common (unlimited authorized, issued and outstanding 260,000 shares) 520,000 600,000 Retained earnings[1] 236,441 Accumulated other comprehensive income 55,000 891,441 Total liabilities and shareholders’ equity $2,702,000 Net income = (4,858,000 + 40,000 + 102,000 − 3,050,000 − 11,000 − 8,500 − 135,000 − 1,190,000 − 580,000) = $25,500
-
Debt ratio = 1,810,559 ÷ 2,702,000 = 67.01%
Equity ratio = 891,441 ÷ 2,702,000 = 32.99%
Nearly 70% of all assets are provided by creditors, which is significant. Digging deeper and looking at the current ratio for 1.72 (1,002,000 ÷ 583,000), it appears that the current assets will adequately cover the current liabilities. It follows that the $1.2M in long-term obligations is the true risk for this company. The company may have to re-finance the note payable when comes due in 3 more years, or sell off any assets not currently contributing to profit. Selling off long-term assets is a reasonable step provided that the assets are idle and will not be used in the foreseeable future to earn profits. This company’s debt ratio is high, so it has very little financial flexibility.
- The credit balances in accounts receivable represent amounts owing to specific customers. IFRS requires that significant credit balances be separated and reported as a current liability.
Current ratio without separation of the credit 1,002,000 ÷ 583,000 = 1.72
Current ratio with separation of the credit (1,002,000 + 250,000) ÷ (583,000 + 250,000) = 1.50
Managers may not be aware of the impact that the reporting requirement (to classify credit receivables as current liabilities) can have on the current ratio. In this case, this ratio has weakened significantly once the credit amount of $250,000 is reclassified from a current asset to a current liability. If the company had a restrictive covenant to maintain a current ratio of 1.7 times, this could spell disaster for the company in two ways. First, creditors expect a restrictive covenant ratio to be maintained at all times. If this ratio slips below that threshold, any short-term notes owing to the creditor would become payable immediately as a demand loan. This would create significant pressure to raise enough cash in a short period of time to make the single, large payment. Second, if the debt owing to that creditor also includes any long-term debt, the creditor could also force the company to reclassify the long-term balances to current liabilities, driving the current ratio even lower. This might be all that it takes to drive a marginally performing company into bankruptcy, which is a no-win for either the company or its creditors.
The following are possible conditions or situations that would give rise to a credit balance in accounts receivable customer accounts:
- Customers returned goods after the account was paid.
- A customer has overpaid an account in error.
- The company policy may be no cash refunds. Any returns would therefore be credited to the customer account to be used later for a future purchase.
- Most of the accounting software applications apply customer prepayments (unearned revenues) as a credit balance in accounts receivable, since eventually the actual amounts when owed by the customer at the time the goods and services provided will be debited to the accounts receivable sub-ledger when the invoice is prepared.
- On the basis of materiality, the credit balances, if insignificant, will likely remain with the existing accounts receivable as small credit balances.
Exercise 4.4
-
Hughey Ltd.
Statement of Financial Position
As at December 31, 2021Assets Current assets Cash $250,000 Accounts receivable $1,015,000 Less allowance for doubtful accounts (55,000) 960,000 Inventory – at lower FIFO cost and NRV 1,300,000 Prepaid insurance 40,000 Total current assets $2,550,000 Long-term investments Investments, FVOCI, of which investments costing $800,000 have been pledged as security for notes payable to bank 2,250,000 Property, plant, and equipment 530,000 Land 770,000 Accumulated depreciation (300,000) 470,000 Equipment 2,500,000 Accumulated depreciation (1,200,000) 1,300,000 2,300,000 Intangible assets Patents (net of accumulated amortization of $35,000) 25,000 Total assets $7,125,000 Liabilities and Shareholders’ Equity Current liabilities 7% notes payable to bank, secured by investments which cost $800,000 $600,000 Accounts payable 900,000 Accured liabilities 300,000 Total current liabilities 1,800,000 Long-term liabilities Bonds payable, 25-yr, 8%, due December 31, 2030 at amortized cost 1,100,000 Total liabilities 2,900,000 Shareholders’ equity Paid-in capital Common shares; 100,000 shares authorized, 80,000 shares issued and outstanding 2,500,000 Retained earnings 1,330,000 Accumulated other comprehensive income 395,000[2] 4,225,000 Total liabilities and shareholders’ equity $7,125,000 - Patent annual amortization: 60,000 − 25,000 = 35,000 total amortization for the period January 1, 2015 to December 31, 2021 or 7 years amortized since its purchase. $35,000 ÷ 7 years = $5,000 per year
- This company follows IFRS because it has classified and reported some of its investments as available for sale (OCI) which is a classification only permitted by IFRS companies. ASPE does not have this classification.
Exercise 4.5
| Description | Section | Amount |
|---|---|---|
| Issue of bonds payable of $500 cash | Financing | 500 |
| Sale of land and building of $60,000 cash | Investing | 60,000 |
| Retirement of bonds payable of $20,000 cash | Financing | (20,000) |
| Current portion of long-term debt changed from $56,000 to $50,000 | Financing | The current portion of long-term debt for both years would be added to their respective long-term debt payable accounts and reported as a single line item in the financing section. |
| Repurchase of company’s own shares of $120,000 cash | Financing | (120,000) |
| Issuance of common shares of $80,000 cash | Financing | 80,000 |
| Payment of cash divided of $25,000 recorded to retained earnings | Financing | (25,000) |
| Purchase of land of $60,000 cash and a $100,000 note | Investing | (60,000) |
| Cash dividends received from a trading investment of $5,000 | Operating | 5,000 |
| Interest income received in cash from an investment of $2,000 | Operating | 2,000 |
| Interest and finance charges paid of $15,000 | Operating | (15,000) |
| Purchase of equipment for $32,000 | Investing | (32,000) |
| Increase in accounts receivable of $75,000 | Operating | (75,000) |
| Decrease in short-term payable of $10,000 | Operating | (10,000) |
| Increase in income taxes payable of $3,000 | Operating | 3,000 |
| Purchase of equipment in exchange for a $14,000 long-term note | None: non-cash | – |
Exercise 4.6
-
Camel Corp.
Balance Sheet
As at December 31, 2021Assets Current assets Cash $247,600 Accounts receivable (net) 109,040 Total current assets 356,640 Investment in land (at cost) 220,000 Property, plant, and equipment Land $200,000 Building (net) 87,200 Equipment (net) 198,000 485,200 Total assets $1,061,840 Liabilities and Shareholders’ Equity Current liabilities Accounts payable $55,200 Current portion of long-term debt 32,000 Total current liabilities 87,200 Long-term liabilities Mortgage payable 110,200 Total liabilities 197,400 Shareholders’ equity Common shares $470,000 Retained earnings 394,440 864,440 Total liabilities and shareholders’ equity $1,061,840 The required disclosures discussed in Chapter 3 that were missed were the AFDA, the accumulated depreciation for the building and equipment, the interest rate, securitization and due date for the mortgage payable classified as a long-term liability, and the authorized and issued common shares in the equity section.
Calculations Worksheet:
Adjustments Dr Cr Dr Cr Cash $84,000 1,356,600[3] 1,193,000[4] 247,600 Accounts receivable (net) 89,040 1,000,000 980,000 109,040 Investments – trading 134,400 134,400 – Buildings (net) 340,200 225,000
28,000
87,200
Equipment (net) 168,000 50,000 20,000 198,000 Land 200,000 220,000 420,000 $1,015,640 $1,061,840 Accounts payable $146,000 900,000 809,200 55,200 Mortgage payable 172,200 30,000 142,200 Common shares 400,000 70,000 470,000 Retained Earnings 297,440 8,000 105,000 394,440 $1,015,640 2,123,680 $1,061,840 Revenues $1,000,000 A/R 1,000,000 Gain 2,200 2,200 Total revenue 1,002,200 Expenses Operating expenses 809,200 809,200 Interest expenses 35,000 35,000 Depreciation 48,000 48,000 Loss 5,000 5,000 897,200 Net income $105,000 4,461,800 4,566,800 – 105,000 net income 4,461,800 4,461,800 to retained earnings -
Camel Corp.
Statement of Cash Flows
For the Year Ended December 31, 2021Cash flows from operating activities Net income $105,000 Adjustments for non-cash revenue and expense items in the income statement: Depreciation expense $ 48,000 Gain on sale of investments (2,200) Loss on sale of building 5,000 Decrease in investments – trading 136,600 Increase in accounts receivable ($109,040 − $89,040) (20,000) Decrease in accounts payable ($146,000 − $55,200) (90,800) 76,600 Net cash from operating activities 181,600 Cash flows from investing activities Proceeds from sale of building ($225,000 − $5,000) 220,000 Purchase of land (220,000) Net cash from investing activities 0 Cash flows from financing activities Reduction in long-term mortgage principal (30,000) Issuance of common shares 20,000 Payment of cash dividends (8,000) Net cash from financing activities (18,000) Net increase in cash 163,600 Cash at beginning of year 84,000 Cash at end of year $ 247,600 Note:
- The purchase of equipment through the issuance of $50,000 of common shares is a significant non-cash financing transaction that would be disclosed in the notes to the financial statements.
- Cash paid interest $35,000
Had there been cash paid income taxes, this would also be disclosed.
- Free cash flow
Net cash provided by operating activities
Capital purchases – land
Cash paid dividends
Free cash flow
$ 181,600
(220,000)
(8,000)
$(46,400)
An analysis of Carmel’s free cash flow indicates it is negative as shown above. Including dividends paid is optional, but it would not have made a difference in this case. What does make the difference in this case is that the capital expenditures are those needed to sustain the current level of operations. In Carmel’s case, the land was purchased for investment purposes and not to meet operational requirements. The free cash flow would more accurately be:
Net cash provided by operating activities
Capital purchases
Cash paid dividends
Free cash flow
$ 181,600
0
(8,000)
$173,600
This makes intuitive sense and is supported by the results from one of the coverage ratios.
The current cash debt coverage provides information about how well Carmel can cover its current liabilities from its net cash flows from operations:
Net cash from operating activities ÷ Average current liabilities
Carmel’s current cash debt coverage is ($181,600 ÷ ((87,200 + 176,000) × 50%) = 1.38. The company has adequate cash flows to cover its current liabilities as they come due and so overall, its financial flexibility looks positive.
In terms of cash flow patterns, Carmel has managed to more than triple its cash balance in the year mainly from cash generated from operating activities, which is a good trend. Carmel was able to pay $8,000 in dividends, or a 1.7% return. If dividends are paid several times throughout the year, the return is more than adequate to investors. Carmel also sold off its traded investments for a profit and some idle buildings at a small loss to obtain sufficient internal funding for some land that it wants as an investment. Carmel also managed to lower its accounts payable levels by close to 60%. All this supports the assessment that Carmel’s financial flexibility looks reasonable.
- The information reported in the statement of cash flows is useful for assessing the amount, timing, and uncertainty of future cash flows. The statement identifies the specific cash inflows and outflows from operating activities, investing activities, and financing activities. This gives stakeholders a better understanding of the liquidity and financial flexibility of the enterprise. Some stakeholders have concerns about the quality of the earnings because of the various bases that can be used to record accruals and estimates, which can vary widely and be subjective. As a result, the higher the ratio of cash provided by operating activities to net income, the more stakeholders can rely on the earnings reported.
Exercise 4.7
| Lambrinetta Industries Ltd. Statement of Cash Flows Year Ended December 31, 2021 |
||
|---|---|---|
| Cash flows from operating activities | ||
| Net income | $161,500 | |
| Adjustments | ||
| Depreciation expense[5] | $25,500 | |
| Change in A/R | 27,200 | |
| Change in A/P | 11,900 | |
| Unrealized loss on investments-trading[6] | 5,200 | |
| Investments purchased | (12,000) | |
| 57,800 | ||
| Net cash from operating activities | 219,300 | |
| Cash flows from investing activities | ||
| Sold plant assets | 37,400 | |
| Purchase plant assets[7] | (130,900) | |
| Net cash from investing activities | (93,500) | |
| Cash flows from financing activities | ||
| Note issued[8] | 42,500 | |
| Shares issued for cash (81,600+37,400 in exch for land – 130,900 ending balance) | 11,900 | |
| Cash dividends paid[9] | (188,700) | |
| Net cash from financing activities | (134,300) | |
| Net decrease in cash | (8,500) | |
| Cash at beginning of year | 40,800 | |
| Cash at end of year | $32,300 | |
Disclosures:
Additional land for $37,400 was acquired in exchange for issuing additional common shares.
Exercise 4.8
| Egglestone Vibe Inc. Statement of Cash Flows For the Year Ended December 31, 2021 |
||
|---|---|---|
| Cash flows from operating activities | ||
| Net income | $ 24,700 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation expense (Note 1) | $ 55,900 | |
| Loss on sale of equipment (Note 2) | 10,100 | |
| Gain on sale of land (Note 3) | (38,200) | |
| Impairment loss–goodwill | 63,700 | |
| Increase in accounts receivable | (36,400) | |
| Increase in inventory | (67,600) | |
| Decrease in accounts payable | (28,200) | (40,700) |
| Net cash used by operating activities | (16,000) | |
| Cash flows from investing activities | ||
| Purchase of investments (FVOCI) | (20,000) | |
| Proceeds from sale of equipment | 27,300 | |
| Purchase of land (Note 4) | 62,400 | |
| Proceeds from sale of land | 150,000 | |
| Net cash provided by investing activities | 94,900 | |
| Cash flows used by financing activities | ||
| Payment of cash dividends (Note 5) | (42,600) | |
| Issuance of notes payable | 10,500 | |
| Net cash used by financing activities | (32,100) | |
| Net increase in cash | 46,800 | |
| Cash at beginning of year | 37,700 | |
| Cash at end of year | $ 84,500 | |
Note: During the year, $160,000 in notes payable were retired by issuing common shares.
-
- $111,800 − $15,600 + X = $152,100; X = 55,900
- $27,300 − ($53,000 − $15,600)
- $150,000 − $111,800
- $133,900 − 111,800 + X = $84,500
- Retained earnings account: $370,200 + 24,700 − X = $374,400; Dividend declared but not paid = $20,500
Dividends payable account: $41,600 + 20,500 − 19,500 = $42,600 cash paid dividends
- Negative cash flows from operating activities may signal trouble ahead with regard to Egglestone’s daily operations, including profitability of operations and management of its current assets such as accounts receivable, inventory and accounts payable. All three of these increased the cash outflows over the year. In fact, net cash provided by investing activities funded the net cash used by both operating and financing activities. Specifically, proceeds from sale of equipment and land were used to fund operating and financing activities, which may be cause for concern if the assets sold were used to generate significant revenue. Shareholders did receive cash dividends, but investors may wonder if these payments will be sustainable over the long term. Consider that dividends declared was $20,500, which was quite high compared to the net income for $24,700. In addition, the dividends payable account still had a balance payable for $41,600 from prior dividend declarations not yet paid. All this adds up to increasing the pressure on the company to find enough funds to catch up with the cash payments to investors. Egglestone may not be able to sustain payment of cash dividends of this size in the long term if improvement regarding its profitability and management of receivables, payables and inventory are not implemented quickly.
Exercise 4.9
|
Lisbon Corporation |
|||
| Cash flows from operating activities | |||
| Net income | $36,510 | ||
| Adjustments for non-cash revenue and expense | |||
| items in the income statement: | |||
| Depreciation expense (1) | 5,680 | ||
| Gain on sale of equipment (2) | -3,740 | ||
| Increase in accounts receivable | -6,880 | ||
| Increase in accounts payable | 3,980 | -960 | |
| Net cash from operating activities | 35,550 | ||
| Cash flows from investing activities | |||
| Proceeds - sale of equipment | 9,400 | ||
| Purchase of equipment (3) | -22,460 | ||
| Net cash from investing activities | -13,060 | ||
| Cash flows from financing activities | |||
| Issue (sale) of common shares | 40,000 | ||
| Payment of dividends (4) | -28,830 | ||
| Net cash from financing activities | 11,170 | ||
| Net increase in cash | 33,660 | ||
| Cash - beginning of year | 17,560 | ||
| Cash - end of year | $51,220 | ||
Notes:
(1) Depreciation Expense:
|
Accumulated Depreciation |
|||
| 13,560 | beg bal | ||
| sale | 6,890 | ||
| 5,680 | depreciation expense | ||
| 12,350 | end bal | ||
(2) Gain on sale of equipment:
| Net book value ($12,550 - $6,890) | 5,660 | |
| Proceeds | 9,400 | |
| Since proceeds > NBV = gain | 3,740 | GAIN |
(3) Purchase of equipment:
|
Equipment |
|||
| beg bal | 22,690 | ||
| 12,550 | sale | ||
| purchase | 22,460 | ||
| end bal | 32,600 | ||
(4) Payment of dividends:
|
Retained Earnings |
|||
| 18,760 | beg bal | ||
| 36,510 | net income | ||
| dividends | 28,830 | ||
| 26,440 | end bal | ||
Exercise 4.10
| Account Name | Classification | |
|---|---|---|
| 1 | Preferred Shares | Capital shares |
| 2 | Franchises | Intangible assets |
| 3 | Salaries and Wages Payable | Current liabities |
| 4 | Accounts Payable | Current liabities |
| 5 | Leasehold Improvements | Property, plant and equipment |
| 6 | FV-NI Investments | Current assets |
| 7 | Current Portion of Long-Term Debt | Current liabities |
| 8 | Obligations under Lease (portion due next year) | Current liabities |
| 9 | Bonds Payable (maturing in two years) | Long-term debt |
| 10 | Notes Payable (due next year) | Current liabities |
| 11 | Supplies | Current assets |
| 12 | Mortgage Payable (principal portion due beyond next year) | Long-term debt |
| 13 | Land (for use) | Property, plant and equipment |
| 14 | Bond Sinking Fund Investment | Long-term investment |
| 15 | Inventory | Current assets |
| 16 | Prepaid Insurance | Current assets |
| 17 | Bonds Payable (maturing next year) | Current liabities |
| 18 | Unrealized Gain or Loss—OCI | Accumulated other comprehensive income |
| 19 | Deficit | Retained earnings |
| 20 | FV-OCI Investments | Long-term investments |
| 21 | Common Shares | Capital shares |
| 22 | Dividends Payable | Current liability |
| 23 | Accumulated Depreciation - Equipment | Property, plant and equipment |
| 24 | Petty Cash | Current asset |
| 25 | Interest Payable | Current liability |
| 26 | Income tax payable | Current Liability |
| 27 | Land improvements | Property, plant and equipment |
| 28 | WIP - Direct Materials | Current asset |
| 29 | Wages Payable | Current Liability |
| 30 | Unearned Revenue | Current Liability |
| 31 | Litigation Liability | Current Liability |
| 32 | Accounts receivable | Current asset |
| 33 | Accumulated depreciation - buildings | Property, plant and equipment |
| 34 | Allowance for doubtful accounts | Current asset |
| 35 | Buildings | Property, plant and equipment |
| 36 | Copyrights | Intangible assets |
| 37 | Inventory | Current asset |
| 38 | Equipment | Property, plant and equipment |
| 39 | Patents | Intangible assets |
| 40 | HST Payable | Current liability |
- 290,941−90,000+20,000 investment trading adj−10,000 inventory adj+NI of $25,500 = $236,441 ↵
- Opening balance of $245,000 + $150,000($2,250,000 − 2,100,000) for unrealized holding gain – OCI on FVOCI investments. ↵
- 1Cash increases due to 980,000 A/R collections, 136,600 proceeds from the sale of the trading investments, 220,000 from the sale of the building and 20,000 from the issuance of additional common shares = 1,356,600 ↵
- Cash decreases due to 900,000 payments of accounts payable, 8,000 payment of cash dividends, 220,000 for additional land, and 65,000 for payments for the mortgage payable = 1,193,000 ↵
- $136,000 − 13,600 − 147,900 ↵
- $81,600 + 12,000 − 88,400 ↵
- $345,100 − 51,000 − 425,000 ↵
- $75,000 + 10,000 − 119,500 − 8,000 ↵
- $314,500 + 161,500 − 287,300 ↵
