Plant and equipment less accumulated depreciation of $$1,419,000$

$4,111,000$

Cash surrender value of life insurance policy

Unamortized bond discount

Notes receivable $($short$-$term$)$

Goodwill

Land

Current liabilities include:

Accounts payable

Notes payable $($due $2028)$

Estimated income taxes payable

Premium on common stock

Long$-$term liabilities include:

Unearned revenue

Dividends payable $($cash$)$

$8\%$ bonds payable $($due May $1,2030)$

$$516,000$

$157,000$

$148,000$

$150,000$

$$971,000$ Stockholders' equity includes:

Retained earnings

Common stock, par value $$10$; authorized $200,000$ shares, $184,000$ shares issued

$$2,756,000$

$\backslash$table$[[(1,840,000)/($$$4,596,000)]]$

The supplementary information below is also provided.

On May $1,2025,$ the corporation issued at $99\mathrm{.}20,$$$750,000$ of bonds to finance plant expansion. The long$-$term bond

agreement provided for the annual payment of interest every May $1.$ The existing plant was pledged as security for the loan.

Use the straight$-$line method for discount amortization.

The bookkeeper made the following mistakes.

a$.$ In $2023,$ the ending inventory was overstated by $$183,000.$ The ending inventories for $2024$ and $2025$ were correctly

computed.

b$.$ In $2025,$ accrued wages in the amount of $$222,000$ were omitted from the balance sheet, and these expenses were not

charged on the income statement.

c$.$ In $2025,$ a gain of $$178,000($net of tax$)$ on the sale of certain plant assets was credited directly to retained earnings.

A major competitor has introduced a line of products that will compete directly with Sunland's primary line, now being

produced in a specially designed new plant. Because of manufacturing innovations, the competitor's line will be of comparable

quality but priced $50\%$ below Sunland's line. The competitor announced its new line on January $14,2026.$ Sunland indicates

that the company will meet the lower prices that are high enough to cover variable manufacturing and selling expenses, but

permit recovery of only a portion of fixed costs.

You learned on January $28,2026,$ prior to completion of the audit, of heavy damage because of a recent fire to one of

Sunland's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. Analyze the above information to prepare a corrected balance sheet for Sunland in accordance with proper accounting and reporting

principles. Prepare a description of any notes that might need to be prepared. The books are closed and adjustments to income are to

be made through retained earnings. $($List Current Assets in order of liquidity.$)$

SUNLAND CORPORATION

Balance Sheet

Assets

$

$

::

$

longrightarrow

Liabilities and Stockholders' Equity Current Attempt in Progress

Your firm has been engaged to examine the financial statements of Sunland Corporation for the year $2025.$ The bookkeeper who

maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on

January $2,2020.$ The client provides you with the following information.

An analysis of current assets discloses the following.

Other assets include: