26. On March 31, 2019, SPMD Ltd. prepared an income statement and statement of financial position, but failed to take into account three adjusting journal entries. Prior to correcting this omission, the income statement reported net income of $90,000 and the statement of financial position reported total assets $170,000, total liabilities $70,000, and total shareholders' equity $100,000. Information about the three missing adjusting entries is as follows: 1. Salaries owed amounting to $10,000 for the last two days worked in March were not accrued. The next payroll will be in April. 2. Rent of $8,000 was received for two months in advance on March 1. The entire amount was credited to Unearned Revenue when received. 3. Depreciation of $9,000 was not recorded. Instructions Complete the following table to correct the financial statement amounts shown. (Indicate deductions with parentheses.) Net Total Total Total Shareholders' Income Assets Liabilities Equity Incorrect $90,000 $170,000 $70,000 $100,000 balances Adjustments: 1. Salaries 2. Rent 3. Depreciation Correct balances 27. Great Lakes Logging Ltd. reports the following adjusted account balances, shown in alphabetical order, at the end of its fiscal year October 31, 2018: Accounts payable $ Interest expense $ 1,500 2,800 Accounts receivable 18,225 Interest payable 1,500 Accumulated depreciation- 5,905 Prepaid insurance 3,450 equipment Bank loan payable, due 2021 25,000 Rent expense 15,000 Cash 11,430 Rent payable 1,250 Common shares 5,000 Retained earnings 5,400 Depreciation expense 2,275 Salaries expense 19,200 Dividends declared 600 Salaries payable 2,200 Equipment 25,600 Service revenue 54,275 Income tax expense 2,000 Supplies 3,400 Income tax payable 1,500 1,750 Insurance expense Supplies expense Unearned revenue 1,100 700 Instructions (a) Prepare the closing entries at October 31. (b) Prepare a post-closing trial balance. 28. Selected information (in millions) is available for Amazing Gifts Inc. and V's Lashes Co., Limited for a recent fiscal year: Amazing Gifts V's Lashes Beginning of year $ [1] Total assets Total liabilities Total shareholders' equity 1,203.3 570.8 $14,553.2 [4] 5,630.8 End of year 1,633.2 [2] [5] 9,198.1 [6] 554.2 Total assets Total liabilities Total shareholders' equity Changes during year in shareholders' equity Repurchase of shares Dividends declared Total revenues Total expenses Other decreases in shareholders' equity -0- -0- 434.6 162.4 12,279.6 3,145.7 [3] 11,543.7 53-3 20.0 Instructions (a) Determine the missing amounts for [1] to [6]. (b) Which company has a higher proportion of debt financing at the end of its fiscal year? Of equity financing? (c) Amazing Gifts' year end is the last Saturday in January. V's Lashes' year end is the last Saturday in December. How might these differing year-end dates affect your comparison in part (b)? 29. Five independent situations follow: 1. Jessica Smithers, a student looking for summer work, has opened a vegetable stand along a busy local highway. Each morning, she buys produce from local farmers, then sells it in the afternoon as people return home from work. 2. Aiden Sanderson and Bethany Mills each own a bike shop. They have decided to combine their businesses and try to expand their operations to include skis and snowboards. They expect that in the coming year they will need funds to expand their operations. 3. Three chemistry professors have formed a business that uses bacteria to clean up toxic waste sites. Each has contributed an equal amount of cash and knowledge to the venture. The use of bacteria in this situation is experimental, and legal obligations could result. 4. Alex DaHill has run a successful but small co-operative health and organic food store for over five years. The increased sales at his store have made him believe that the time is right to open a chain of health and organic food stores across the country. Of course, this will require a substantial investment for inventory and property, plant, and equipment, as well as for employees and other resources. Alex has no savings or personal assets. 5. Ashley Embleton, Robert Garth, and Jaime Coetes recently graduated with law degrees. They have decided to start a law practice in their hometown. Instructions (a) In each of the above situations, explain what form of organization the business is likely to take: proprietorship, partnership, public corporation, or private corporation. Give reasons for your choice. (b) Indicate which type of accounting standards-IFRS or ASPE-that each of the business organizations you identified in part (a) is most likely to use for external reporting purposes