Peanut Corporation is a public corporation using IFRS. An analysis of the accounts and discussions with company officials included the following:
|
1-Jan-17 |
31-Dec-17 |
1-Jan-17 |
31-Dec-17 |
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|
Accounts receivable |
102,000 |
Income taxes payable |
20,375 |
? |
|
|
Cost of goods sold |
365,000 |
Common shares |
200,000 |
226,000 |
|
|
Dividend revenue |
9,000 |
Long term note payable (due Oct 1, 2021) |
158,000 |
100,000 |
|
|
Selling expenses |
74,300 |
Machinery and equipment |
283,400 |
325,000 |
|
|
Unearned revenue |
3,000 |
Common share dividends declared and paid |
6,000 |
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|
Cash |
72,900 |
60,000 |
Retained earnings |
155,500 |
233,125 |
|
Interest expense |
8,500 |
General and administrative expenses |
194,000 |
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|
Land |
170,000 |
Allowance for doubtful accounts |
5,000 |
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|
Loss on sale of equipment |
3,700 |
Accumulated depreciation – machinery and equipment |
80,000 |
90,000 |
|
|
Patent |
240,000 |
250,000 |
Accumulated amortization – patent |
140,000 |
150,000 |
|
Supplies inventory |
40,000 |
Preferred shares (5% cumulative 180 issued) |
180,000 |
180,000 |
|
|
Sales |
760,000 |
Preferred share dividends declared and paid |
9,000 |
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|
Accounts payable |
31,000 |
FV-OCI Investments |
? |
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|
Inventory |
62,500 |
Accumulated other comprehensive income |
nil |
? |
Unless indicated otherwise, you may assume a 25% income tax rate. No provision has been made for 2017 income tax expense and it is necessary to record the provision to complete the financial statements. The amount of the provision should be booked to income taxes payable. This provision represents the December 31, 2017 income taxes payable balance.
General and administrative expenses include depreciation of $22,500 and amortization of $10,000.
Additional information
Equipment with an original cost of $31,200 was sold for $15,000 during 2017. The equipment had been depreciated to the date of sale by $12,500. This sale resulted in a $3,700 loss.
On May 1, 2017, the company issued 6,000 common shares for $26,000 cash. As a result, there were 27,000 common shares outstanding at December 31, 2017.
Patents valued at $10,000 were purchased during the year in exchange for a long-term note.
During the year, the company purchased an investment for $39,500. The company classified this investment as FV-OCI and long term. The company has not booked any year end adjusting entry. At December 31, 2017, the investment’s fair value was 42,500. NO income tax provision should be made on the unrealized gain or loss.
Long-term notes totaling $10,000 were issued in exchange for the patent purchased for the same amount during the year.
Changes in current assets and current liabilities, other than cash and income taxes payable are indicated below:
|
Increase in accounts receivable |
11,300 |
|
Decrease in inventory |
13,500 |
|
Decrease in supplies inventory |
10,000 |
|
Decrease in accounts payable |
4,125 |
|
Decrease in unearned revenue |
6,000 |
|
Required: (a to d) (44 marks) |
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Prepare the following financial statements IN GOOD FORM for Peanut Corporation for the year ended December 31, 2017. Provide support for all calculations so part marks can be awarded. These calculations can be completed in the space provided on the last page. |
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- Statement of Comprehensive Income (multi-step), including the adjustments for the income tax provision and the FV-OCI investment
- Statement of Changes in Shareholders’ Equity
