Fall Corporation's capital structure consists of 500,000 authorized shares of common stock, of which 100,000 have been issued and are still outstanding. At December 31, 2023, an analysis of the accounts and discussions with company officials revealed the following information:

Cash.....913,481

Investment in trading securities... 5,180,000

Fair value adjustment (trading securities debit balance).... 50,000

Accounts receivable (trade accounts)..501,785

Allowance for uncollectible accounts (debit balance) 8,000

Inventory..140,000

Land (used for Building under Construction).. 824,700

Pension plan assets.. 1,300,000

Building under construction.. 3,000,000

Property, plant and equipment 664,000

Accumulated depreciation ..200,000

Right of use asset 200,000

Patents..204,000

Deferred tax asset..20,464

Accounts payable ..90,000

4% Notes payable (maturity 7/1/26 - $40,000 due July 1, 2024). 160,000

Interest payable.18,562

Warranty payable 22,320

Discount on bonds payable 102,660

Bonds payable.. 5,000,000

Lease payable...192,024

Projected benefit obligation 1,030,000

Deferred tax liability 40,000

Common stock ($1 par value). 100,000

Paid in capital in excess of par. 280,000

Retained earnings, January 1, 2023..1,877,435

Accumulated other comprehensive income (debit balance)...(10,000)

Sales revenue.. 7,289,015

Cost of goods sold2,971,090

Depreciation expense.. 40,000

General and administrative expenses..600,000

Selling expenses..800,000

Amortization expense...24,000

Dividend revenue.. 150,000

Interest expense 357,200

Gain on investments (realized)....450,000

Gain on settlement of lawsuit...1,200,000

Pension expense...130,000

Lease expense....57,976

REQUIRED:

1 Prepare a trial balance for the above accounts.

2 Prepare adjusting journal entries as of December 31, 2023, as follows. Parts (b) and (c) use the Inventory for Fall Company 3120-B03 F23 Excel Data file. ROUND TO WHOLE NUMBERS.

a) The fair value of the Investments in Trading Securities is $5,800,000. Record the unrealized gain or loss. (Note that there is a previous debit balance in the Fair Value Adjustment account of $50,000.)

b) Record the bad debts expense by estimating the amount of bad debts that will be uncollectible from the above Excel Data file. Use an analytical tool (Tableau - Create bins of 30 days, Excel Pivot Tables, Power BI) to perform the analysis. (Note that there is a previous debit balance in the Allowance for Uncollectible Accounts.) Uncollectible accounts should be computed as follows:

Days Uncollected	Percentage Uncollectible
1-29 days uncollected	3%
30-59 days uncollected	10%
60-89 days uncollected	20%
90 or more days uncollected	40%

c) Estimate the amount of projected warranty expense for sales in 2023 that have not been recorded yet from the above Excel Data file using an analytical tool (Tableau, Excel Pivot Tables, Power BI). (Fall only offers a one-year warranty so all of the warranties from 2022 have expired. Note that there is a previous credit balance in the Warranty Payable account). The estimated potential warranty expense should be computed as follows:

Sales Category	% Estimated Warranty Obligation
College Boards	.5%
Connectors	15%
Covers	4%
MLB Boards	1%
NFL Boards	1%
Paddles	5%

d) Accrue unused vacation pay that can be taken in 2024 in the amount of $25,000. (All of the vacation pay of $20,000 from 2022 was taken in 2023 Debit General and Administrative expense for these salaries).

e) On January 1, 2022, Fall Company leased some equipment for $250,000. The correct Right-of-Use asset was recorded and amortized for one year. However, the bookkeeper made the second of five payments of $57,976 on January 1, 2023, and again incorrectly recorded the transaction as follows on January 1:

Lease expense $57,976

Cash $57,976

f) Accrue annual interest expense on the lease in (e) at 8%.

g) Record the second year of amortization for the lease in (e).

h) The bookkeeper recorded the two semiannual bond interest payments on June 30 and December 31 as follows, instead of correctly using the effective interest method:

6/30/23 Interest expense $175,000

Cash $175,000

12/31/23 Interest expense $175,000

Cash $175,000

i) Prepare the income tax accrual assuming the tax rate is 20%. The differences between book and tax are as follows:

Future deductible amounts: Warranty expense and vacation pay from parts (b) and (c). (Ignore the other adjusting

entries from this year for the accrual). Include reversals of 2022 warranty expense of $60,000 and 2022

vacation payable of $20,000 as well as this years warranty and vacation expense accruals.

Future taxable amount: Tax depreciation was $160,000, whereas book depreciation was only $40,000.

Taxable income for 2023 is $4,417,160.

There are previous balances in Deferred Tax Assets of $20,464 and Deferred Tax Liabilities of $40,000.

3 Prepare an adjusted trial balance.

4 - Prepare a multiple-step income statement for the year ended December 31, 2023, including the earnings per share information. WARRANTY, PENSION, SALARY AND LEASE EXPENSES SHOULD BE INCLUDED IN GENERAL AND ADMINISTRATIVE EXPENSES ON THE INCOME STATEMENT. BAD DEBT EXPENSE SHOULD BE INCLUDED IN SELLING EXPENSES.

5 Prepare a Statement of Retained Earnings for the year ended December 31, 2023.

6 Prepare a Classified Balance Sheet as of December 31, 2023.

7 Fall Company is building a bigger manufacturing facility with plans to quadruple sales of its boards. We currently have one sales representative per region. Using an analytical tool of your choice, in which markets should they expand? You must justify your suggestions with graphs, tables, etc.