Clark took the proceeds from dissolving the partnership and purchased a corporation selling electrical parts used for large production companies, Solar Electric Inc.. He employs several people, but is looking to expand his operations further. In addition to expanding the sales of electrical parts, he also wants to start selling heating, ventilation and air conditioning (HVAC) parts and machinery through a separate division of the company called 'HVAC Parts & Machinery.' Currently, Clark owns all the shares in the corporation. To raise the needed cash, he decides to offer common and preferred shares for sale to investors starting in 2023. Below is the balance sheet at the end of 2022. Assets Cash Accounts Receivable Prepaid Insurance Inventory Property, Plant & Equipment Accumulated Depreciation Total Assets Solar Electric Inc. Balance Sheet As at December 31, 2022 $158,700 32,600 Liabilities Accounts Payable Unearned Revenue 6,700 Bank Loan 82,400 Total Liabilities $35,400 21,000 45,000 101,400 180,000 Shareholders' Equity -41,000 Common Shares - 150,000 issued 150,000 Retained Earnings 168,000 Total Shareholder's Equity 318,000 $419,400 Liabilities & Owner's Equity $419,400 At 2022, Clark has authorized 300,000 common shares and 60,000 preferred shares. The preferred shares will be cumulative and pay $6 dividends. The 150,000 shares issued were issued to Clark. He will maintain control of the company and sit on the board of directors. Assume the tax rate is 34%. Assume income tax has already been paid. You will just have to calculate the income tax expense on the income statement. Solar Electric Inc. Adjusted Trial Balance December 31, 2023 Account Title Cash Debit Credit $100,649 Accounts Receivable $35,860 Interest Receivable Prepaid Insurance Short-Term Investment - Citi Inc. $9,113 $7,370 $237,000 Short-Term Investments - Bonds $135,000 Valuation Allowance for Fair Value Adjustment $50,700 Inventory $90,640 Investment in HSBC Inc. Common shares $503,840 Long-Term Investment - Bond $145,000 Discount on Bonds $15,741 Property, Plant & Equipment Accumulated Depreciation Accounts Payable Interest Payable Unearned Revenue Premium on Bonds Bonds Payable Bank Loan Common Shares Preferred Shares Retained Earnings Interest Revenue Revenue from Investment in HSBC Inc. $280,000 Unrealized Gain on Fair Value Adjustment Income Tax Savings - Discontinued Operations Sales Revenue Sales Discounts Sales Returns and Allowances Cost of Goods Sold $31,500 Depreciation Expense Insurance Expense Interest Expense Loss from Discontinued Operations Maintenance Expense Professional Fees Expense Rent Expense Salaries Expense Telephone Expense Travel Expense Income Tax Expense - Continuing Operations Unrealized Loss on Fair Value Adjustment Total Notes: $86,000 $212,400 $31,167 $21,000 $340,000 $225,000 $362,000 $80,000 $38,000 $16,363 $136,640 $50,700 $24,480 $1,050,000 $52,500 $441,000 $45,000 $5,800 $54,812 $72,000 $36,300 $24,800 $49,200 $80,700 $6,110 $27,700 $135,415 $2,673,750 $2,673,750 The bank loan is payable over 9 years and $25,000 will be paid by December 31, 2024. The interest on this loan is 10% per annum. C