Background:

At the end of $2023,$ Alkarama Corporation's computerized information systems experienced a serious malfunction. The information technology specialists along with the company's accounting team were able to recover the following information:

The following account balances as of January $1,2023$:

Supplies

Inventory

Prepaid rent

Machine

Accumulated depreciation Salaries payable Unearned rent revenue Notes payable

Retained earnings

$1,20038,00022,000$

$7,000$

$200$

$5,50010,75001,750$

$($in Thousands of Dollars$)$

Debits

Credits

The income statement for the year ending of December $312023($amounts in thousands$)$:

Sales revenue

Cost of goods sold Gross profit Operating expenses:

Salaries expense Supplies expense Rent expense Depreciation expense Bad debt expense

Total operating expenses Operating income

Other income: Rent revenue

Net income

$$14,0002,0003,0001,2001,950$

$$54,25031,00023,250$

$$22,1501,100$

$17,250$

$$18,350$

Alkarama Corporation Income Statement

For the Year Ended December $312023$

The portion of the statement of cash flows for the year ending December $31,2023($amounts in thousands$)$:

Alkarama Corporation Statement of Cash Flows

For the Year Ended December $312023$

Cash Flows from Operating Activities

Net income

Deprecation

Increase in accounts receivable Decrease in supplies

Decrease in inventory

Decrease in prepaid rent

Decrease in Accounts payable

Increase in salaries payable

Decrease in unearned rent revenue

Net cash flows from operating activities

$$18,3501200(8,900)2509,0003,000(15,000)7,500(10,350)$

$$5,050$

The team found the following statement of financial position. However, due to the malfunction, the statement has missing information and classification inaccuracies $($amounts in thousands$).$ The only additional piece of information that was recovered was a receipt showing that the machines were purchased with cash.

Alkarama Corporation Statement of Financial Position At December $31,2023$

Assets

Current assets:

Inventory

Supplies

Cash

Accounts receivable

Less: Reserve for accounts receivable

Goodwill Prepaid rent

Total current assets Property and equipment:

Land held for sale

Machines

Less: Depreciation reserve

Total assets

Shareholders Equity and Liabilities

Shareholders' equity: Share capital

Unearned rent revenue Retained earnings

Total shareholders' equity Current liabilities:

Accounts payable

Salaries payable

Foreign currency translation reserve Note payable $($Due in $2025)$

Total current liabilities

Total shareholders' equity and liabilities

$$12,8502,450$

$?$

$?$ $$42,650$

$10,4002,000?104,000$

$33,00012,900$

$?$

$80,000?18,100$

$20,000?10,0007,000$

$?$

$$148,500$

$$68,100$

$50,400$

$$148,500$

Required:

$1.$ Examine the errors and misclassifications in the given statement of financial position. Drawing upon your accounting expertise, elaborate on the reasons you think these inaccuracies have occurred. $(2$ Marks$)$

$2.$ Utilize concepts from accounting knowledge, supported by examples from similar situations, to frame the issue of identifying the absent data in the provided statement of financial position. $(1$ Mark$)$

$3.$ Propose an innovative solution for creating an accurate and well$-$structured statement of financial position and cash flows as of December $31,2023,$ that is free from errors and missing information. Convince stakeholders of the solution's effectiveness, feasibility, and acceptability. $(6$ Mark$)$

$4.$ Clearly articulate the significance of the classification and structure of the statement of financial position and discuss the potential implications and consequences of these aspects. $(1$ Mark$)$