$25 $2 Q1: Compute the missing amount (?) for each company, amounts in millions. Balance sheet Gilbert Corp Mandy Co. Gurbir Inc. Beginning Assets $80 $ 40 Liabilities $ 43 $1 Share capital 59 $3 Retained earnings ? $ 12 SS Ending Assets ? S 42 $8 Liabilities $ 48 S24 Share capital ? SI Retained earnings ? Income statement Revenues S218 ? S 12 Expenses $ 210 S 152 Net income ? ? Retained Earnings: Beginning retained $28 S 12 SS camnings + Net Income ? 59 $4 -Dividends S(3) S (5) S (2) - Ending retained $ 33 $ 16 carnings $3 $33 $7 At the end of the year, which company has the: Highest net income? Highest percentage of net income to revenues? Q2: The manager of News Maker, Inc., prepared the company's Balance Sheet while the accountant was ill. The Balance Sheet contains numerous errors. In particular, the manager knew that the Balance Sheet should balance, so he plugged in the shareholders' equity amount needed to achieve this balance. The shareholders' equity amount is not correct. All other amounts are accurate. News Maker, Inc. Balance sheet For the Month Ended November 30, 20X6 Assets Liabilities Cash 7,000 Notes receivable Equipment 38.200 Interest expense 2.000 Accounts payable 5.000 Office supplies 700 Utilities expense 1,200 Accounts receivable 3.200 Advertising expense 200 Notes payable $6,000 Land 81.000 Total S 95.900 Salary expense 55,000 Shareholders' Equity Shareholders' equity Total assets $ 138,300 Total liabilities $ 138,300 62.400 Requirements: 1. Prepare the correct Balance Sheet and date it properly. Compute total assets, total liabilities, and shareholders' equity. 2. Is News Maker in better (or worse) financial position than the erroneous Balance Sheet reports? Give the reason for your answer. 3. Identify the accounts listed on the incorrect Balance Sheet that should not be reported on the Balance Sheet. State why you excluded them from the correct Balance Sheet you pre-pared for Requirement 1. On which financial statement should these accounts appear? Q3: The assets and liabilities of Post Shrub as of December 31, 20X6, and revenues and expenses for the year ended on that date follow. Land 5 Notes payable Property tax expense Rent expense Accounts receivable Service revenue Supplies Utilities expense 8,000 Equipment 5 32,500 Interest expense 1.500 Interest payable 13.200 Accounts payable 27.000 Salary expense 143.000 Building 1,700 Cash 3,000 Share capital 16.300 4.850 1.000 13.500 37,000 129,200 15.000 16.250 Beginning retained earnings were 116,500, and dividends totaled 46,000 for the year. Requirements 1. Prepare the Income Statement of Post Shrub, Inc., for the year ended December 31, 20X6. 2. Prepare the company's statement of changes in equity for the year. 3. Prepare the company's Balance Sheet at December 31, 20x6. 4. Analyze Post Shrub, Inc., by answering these questions: a. Was Post Shrub profitable during 20X6? By how much? b. Did retained earnings increase or decrease? By how much? c. Which is greater, total liabilities or total equity? Who owns more of Post Shrub's assets, creditors of the company or Post Shrub's shareholders