Case Facts: You recently joined the staff of Bombay Corporation, a multi-national retail business. You have been asked to review the income statementand balance sheet prepared by the previous staff accountant. The statements and additional information are found on pages 2-3. Required: 1. Discuss the purpose of a classified balance sheet. 2. Discuss the purpose of a multi-step income statement. 3. Describe the deficiencies in each of the current statements and identify how they should be corrected. You may include corrected financials if you like. Financial Statements and Additional Information: BOMBAY CORPORATION Balance Sheet As of December 31, 2019 Assets Current Assets: Cash $ 275,000 78,000 Marketable securities Accounts receivable 487,000 Inventories 425,000 (50,000) Allowance for uncollectible accounts Property and Equipment: Machinery Furniture and Fixtures 90,000 50.000 Land 20.000 Total assets $1,375,000 Liabilities and Shareholders' Equity Current Liabilities: S 411,000 9,000 Accounts payable and accrued liabilities Interest Payable Notes payable Shareholders' Equity: 200,000 Common stock 260,000 Retained earnings 495.000 Total liabilities and shareholders' equity S1,375.000 BOMBAY CORPORATION Income Statement For the Year Ended December 2009 Net als Expenses Cost of goods sold 1979 seling and Total Additional Information: A multi-step income statement is appropriate for this company 2. Net sales includes a loss of $320,000 from a discontinued component whose sale was completed October 31, 2019 Selling and administrative expenses include $90,000 representing costs incurred by the company in restructuring some of its operations. The amount is material. 4. The land that appears in the balance sheet is being held for future sale. s. The investment portfolio includes short-term investments valued at $57,000. The remaining investments will not be sold until the year 2021. Notes payable consists of two notes: Note 1: $80,000 face value dated September 30, 2019. Principal and interest at 10% are due on September 30, 2020. Note 2: $120,000 face value dated April 30, 2019. Principal is due in three equal installments of $40,000 plus interest on the unpaid balance. The three payments are scheduled for April 30, 2020, April 30, 2021, and April 30, 2022. Interest on both loans has been correctly accrued and is included in liabilities on the balance sheet and selling and administrative expenses on the income statement Depreciation is calculated using the straight-line method. 2 500,000 shares of no par stock are authorized; 100,000 shares are issued and outstanding. The income tax rate for this company is 30%