Plankton Corporation's trial balance at December 31, 2021, la presented below: Cash Accounts receivable Allowance for doubtful accounts Merchandise inventory Investment in associate Investment at FVTOCI-equity Land Building Accumulated depreciation-building Equipment Accumulated depreciation-equipment Accounts payable Income tax payable PLANKTON CORPORATION Trial Balance December 31, 201 Bonds payable (6%, due January 1, 2026) Common shares, unlimited number of no par value shares authorized, 100,000 issued Retained earnings Accumulated other comprehensive income Sales Cost of goods sold Operating expenses Interest revenue Interest expense Income tax expense Total All transactions and adjustments for 2001 have been recorded and reported in the trial balance except for the items described below. Debit Credit $ 48,000 $1,000 $ 2,500 22,700 85,000 30,000 90,000 200,000 40,000 370,000 180,000 6,250 40,000 15,000 18,775 125,025 100,000 110,775 5,000 750,000 375 50.000 $1,172,950 $1,172,950 Jan. 7 Mar. Issued 1,000 preferred shares for $25,000. In total, 100,000, $2, noncumulative, convertible, preferred shares are authorized. Each preferred share is convertible into five common shares. 16 Purchased 800 common shares of Osborne Ine., to be held for trading purposes, for $24 per share. July Purchased $100,000 Solar Inc. 10-year, 5% bonds at 108.2, when the market interest rate was 4%. Interest is received semi-annually on July 1 and January 1. Plankton purchased the bonds to earn interest. Aug 2 Sold the Osborne common shares for $25 per share. 5 Invested $20,000 in a money-market fund. Sept 25 Five hundred of the preferred shares issued on January 7 were converted into common shares. Od. 24 Cashed in the money-market fund, rasviving $20,000 plus $200 interest. Nov Dec. 30 Obtained a $50,000 bank loan by issuing a three-year, 6% note payable. Plankton is required to make equal blended payments of $1,521 at the end of each month. The first payment was made on December 31. Note that at December 31, $15,757 of the note payable is due within the next year. 1 Declared the annual dividend on the preferred shares on December 1 to shareholders of record on December 23, payable on January 15 3: Plankton owns 40% of RES. RES carned $20,000 and paid dividends of $1,200 in 2021. The fair value of the RES investment was $98,000. 31 Semi-annual interest is receivable on the Solar Inc. bonds on January 1, 2022. The bonds were trading at 106 on December 31, 2021. 31 The annual interest is due on the bonds payable on January 1, 2022. The par value of the bonds is $130,000 and the bonds were issued when the market interest rate was 7%. 31 The fair value of the long-term investment at FVTOCI-equity was $28,000. Ignore income tax calculation. Instructions a. Record the transactions. b. Prepare an updated trial balance at December 31, 2021, that includes these transactions. e. Using the income statement accounts in the trial balance, calculate income before income tax. Assuming Plankton has a 27% income tax rate, prepare the journal entry to adjust income taxes for the year. Note that Plankton has recorded $50,000 of income tax expense for the year to date. Update the trial balance for this additional entry. For the purposes of this question, ignore the income tax relating to other comprehensive income. d. Prepare the following financial statements for Plankton: (1) income statement, (2) statement of comprehensive incume, (3) statement of changes in shareholders' equity, and (4) balance sheet. For the purposes of this question, ignore the income tax on other comprehensive income. e. Assuming instead that Plankton purchased the Solar Inc. bonds for trading purposes, describe how the investment and related income should be valued and reported in Mankton's financial statements. f. For each of Plankton's investments, explain how the measurement and reporting of the investment and related income accounts might differ if Plankton were a private company reporting under ASPE.