Below is the trial balance for Johnson Berthgate Corp. at December 31, 2021. Accounts are listed in alphabetical order and all have normal balances.

Additional information as at December 31, 2021:

1. Inventory has a net realizable value of $430,000. The weighted average cost method of inventory valuation was used.

2. Trading investments are securities held for trading purposes and have a fair value of $120,000. Investments in bonds are being held to maturity at amortized cost with interest payments each December 31. Investments in other securities are classified as available for sale (FVOCI) and any gains or losses will be recognized through other comprehensive income (OCI). These have a fair value of $180,000 at the reporting date.

3. Correction of the prior period error relates to a missed travel expense from 2020.

The books are still open for 2021.

4. Patents and franchise were being amortized on a straight-line basis. Accumulated amortization to December 31, 2021 is $80,000 for patents and $45,000 for the franchise.

5. Goodwill was recognized at the time of the purchase as the excess of the cash paid purchase price over the net identifiable assets.

6. The bonds were issued at face value on December 31, 2005 and are 5%, 20 year, with interest payable annually each December 31.

7. The 3%, 5-year note payable will be repaid by December 31, 2024 and was signed when market rates were 3.5%.

Below is the payment schedule:

8. During the year ended December 31, 2021, no dividends were declared and there was no preferred or common share activity.
9. On December 31, 2021, the share structure was; common shares, unlimited authorized, 260,000 shares issued and outstanding. $3 preferred shares, non-cumulative, 1,200 authorized, 800 shares issued and outstanding.
10. The company prepares financial statements in accordance with IFRS and investments in accordance with IFRS 9.
11. The income tax rate is 25%.
Required:

a. Prepare a classified statement of financial position as at December 31, 2021, in good form, including all required disclosures identified in Chapter 4. Adjust the account balances as required based on the additional information presented.

b. Calculate the company’s debt ratio and equity ratio and comment on the results.

c. Assume now that accounts receivable is made up of the following:
Accounts with debit balances $ 580,000 Accounts with credit balances (250,000)
Discuss whether this change in the accounts will affect the liquidity of this company.
Round final ratio answers to the nearest 2 decimal places.

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Account Accounts payable Accounts receivable Accrued liabilities Accumulated depreciation, buildings Accumulated depreciation, equipment Accumulated other comprehensive income Administrative expenses Balance $ 350,000 330,000 70,000 110,000 50,000 55,000 580,000 Allowance for doubtful accounts Bonds investment at amortized cost Bonds payable Buildings Cash Commission payable Common shares 15,000 190,000 655,684 660,000 131,000 90,000 520,000 Correction of prior year's error - a missed expense in 2020 (net of tax) 90,000 Cost of goods sold 3,050,000 Equipment 390,000 Freight-out 11,000 Goodwill 30,000 Income tax expense 8,500 Intangible assets, franchise (net) 115,000 Intangible assets, patents (net) 125,000 Interest expense 135,000 Inventory 440,000 Investment (available for sale) 180,000 Investment (trading) 100,000 Land 170,000 Notes payable (due in 6 months) 60,000 Notes payable 571,875 Preferred shares 80,000 Prepaid advertising 6,000 Retained earnings 290,941 Sales revenue 4,858,000 Selling expenses 1,190,000 Unearned consulting fees 13,000 Unrealized gain on trading investments 40,000 Unusual gain 102,000