Question

The bookkeeper for Valix Corp has prepared the following balance sheet as at December 31, 2021:

Valix Corp

Balance Sheet

December 31, 2021

 

Cash	$ 136,000		Current Liabilities	$  280,000
Accounts Receivable (net)	103,200		Long-term Liabilities	480,000
Inventories	64,000		Shareholders’ Equity	175,200
Investments	56,000
Land	320,000
Building (net)	240,000
Trademark (net)	16,000
	$935,200			$935,200

 

The following additional information is provided:

1.         The cash balance includes:

Petty cash   fund	$       320
T-bill	6,400
Cash advance   to employee, payable on demand	1,600
Saving   Account at TD Bank	4,000
Money market   fund	8,000
Chequing   account at the Bank of Montreal	117,920
Bank overdraft at the   Scotia Bank (no other accounts are held at this bank) BankCIBC)	(2,240)
Total	$136,000

 

2.   The allowance for doubtful accounts $16,320. 

 

     

3.      The net realizable value of the inventory that is included in the Balance Sheet is $85,000. 

 

In addition, inventories do not include:

 

·         $32,000 of merchandise that was in transit at December 31. The inventory was sold to ABC Inc. with terms f.o.b. destination point (the net realizable value of this inventory is $30,000).

·         $16,000 was shipped to Park Inc. from Gato on consignment. The net realizable value for this inventory is $24,000.

 

 

 

4.    The investments section includes the following:

     

·         An interest bearing note receivable of $8,000 that was issued on October  1^st, 2021 bearing interest at 2% and is due on October 1, 2022

 

·         Long-term FV-OCI investment $28,800 carrying value (fair value $34,100 at December 31,2021). Management plans on holding on to these investments for a number of years.

 

·         FV-NI Investment 1,000 common shares of BP Inc. purchased at $19.20 per share (fair value $17.50 per share at December 31, 2021). Gato expected to sell the shares as soon as the market price increases more next year. 

 

5.   The land balance includes: land used for operations and recorded at its cost of $320,000 (the appraisal value of the land in 2021 was $550,000). The company doesn’t use the revaluation model.

 

6.   The building originally cost $960,000. Depreciation for 2021 has already been recorded.

 

      RS Credit Union has pledged the building as security for their $480,000 loan to Valix Corp. (collateral), the loan bears annual interests at 2% and is due January 1^st, 2042. On January 1^st of each year Gato pays down $24,000 in principal and the annual interest.     

 

 

7.   The trademark originally cost $25,600 and is being amortized over 8 years on a straight-line basis. Amortization for 2021 had already been recorded. 

 

8. Common shares of $60,000. The company has 100,000 authorized, 5,000 issued and outstanding.

 

9. Current liabilities include: Accounts Payable $26,000,  Deferred Revenue $56,000 and Pension Obligation $198,000.

 

10. The Accumulated Other Comprehensive Income at the beginning of the year was $50,000.

 

Required: 

Part 1 (25 marks)

The company is a Canadian public company. Prepare a Statement of

Financial Position sheet at December 31, 2020 in good form. The categories are: Current Assets,

Long-term Investments, Property, Plant & Equipment, Intangible Assets, Current Liabilities

Long-term Liabilities and Shareholders’ Equity.

 

 

Part 2 (4 marks)

Including any disclosure requirements.

 

Part 3 (6 marks)

Prepare any adjusting entries that you needed to make.

Do not include adjusting entries for depreciation, amortization, inventory or dad debt expense.

 

Part 4 (1 mark) 

What would be the Accumulated Other Comprehensive Income at the end of the 2021?