CASE# 1 Habib Gulzar Inc. is facing problems in the adjustment of Irregular items of Income Statement and Retained earnings statement. Because such adjustments need special knowledge of International Accounting Standards so they have hired your accounting firm for helping them to prepare financial statements. You have been handed over the following information, Selling Expense Write-Off of Account Receivable Gain on sale of Trading Securities Retained Earnings beginning balance Dividend Declared and Paid Cost of Goods Sold Depreciation Expense (current year) Advertisement Expense $200,000 80,000 $110,000 $760,000 $30,000 $800,000 $24,000 60,000 Admin Expenses Income Tax Interest Earned Sales (Gross) Sales Return Sales Discount Rent Expense Interest Expense $100,000 20% $ 145,000 $2,300,000 $20,000 $34,000 $40,000 $61,000 Loss due to Hail Storm - Extraordinary Item (Pre Tax) Loss from Discontinuation of a business unit (Pre Tax) Loss from the operations of Discontinued business unit (Pre Tax) Under statement of Depreciation Expense related to previous year (Pre Tax) Gain from Extraordinary Item (Pre Tax) Gain to change in inventory method (Pre Tax) Write-Off of inventory due to obsolesce $465,000 $120,000 $230,000 $25,000 $600,000 $38,000 $78,000