Please add journal entries of these five issues below into the statement above using ASPE and IFRS. Thank you.
Exhibit II Internal Financial Statements Statement of Financial Position As at December 31 (unaudited) 2020 2019 Assets Current Cash Accounts receivable Inventory Prepaid insurance $ 151,764 334,894 86,800 4.720 578,178 661,897 35,000 20,000 $1.295,075 $ 160,502 411,760 159.400 2,060 733,722 382,158 35,000 Capital Future income tax asset Long-term note receivable 0 $1,150,880 Liabilities and shareholders' equity Current Accounts payable Bank loan-current portion Income taxes payable Bank loan-FirstBank of Canada Common shares Preferred shares Contributed surplus Retained earnings $ 158,318 41,998 44,609 244,925 93,434 900 20,300 4,000 931,516 956.716 $1.295,075 $130,146 72.000 92.920 295,066 130,664 900 20,300 4,000 699,950 725,150 $1,150,890 Cancellation of Common Shares On September 15, the company reacquired and cancelled 9 shares (3 from each of Jack, Joe, and Jamal). The redemption price was $1,035 per share. Jack was unsure of how to account for this transaction, and therefore did not make any entries as at year end for the redemption. Prior to the reacquisition, there were 900 shares outstanding. Convertible Bonds In order to obtain additional capital to finance the expansion, EJA issued $500,000 in 8%, 10-year convertible bonds on January 1, 2020, for $500,000 cash. Each $1,000 bond includes the right to purchase 1 share for $750 during the life of the bond. The current market rate for similar nonconvertible bonds is 9%. The fair value of the option using an option pricing model is $49,760. Purchase of Aircrafts and New Bank Debt of a Jack informed you of the fact that the December 31, 2020, statement of financial position does not include the acquisition of the new aircraft, or the new bank debt. Jack did not even record the journal entry for the first payment made on December 31, 2020. Bank Loan with the First Bank of Canada The total outstanding balance of $93,434 is due in full on January 15, 2021. Jack has left the total balance as long-term as at the December 31 year end because on January 3, 2021, he was able to renegotiate the loan on a long-term basis. Jack has provided you with a copy non-cancellable agreement to refinance the debt as January 3, 2021. Flight No. 877 On November 24, 2020, 26 passengers on Flight No. 877 were injured upon landing when the plane skidded off the runway. Fortunately, no one was injured seriously; however, personal injury suits were still filed on December 1, 2020, for damages totaling $50,000. Legal counsel has studied each suit and advised EJA management that it is probable (about a 60% chance) that they will lose the lawsuit. The loss could range anywhere between $20,000 and $50,000. If the lawsuit is lost, there is a 20% chance that EJA will have to pay $20,000, a 55% chance that it will have to pay $50,000, and a 25% chance that EJA will pay $35,000. Exhibit II Internal Financial Statements Statement of Financial Position As at December 31 (unaudited) 2020 2019 Assets Current Cash Accounts receivable Inventory Prepaid insurance $ 151,764 334,894 86,800 4.720 578,178 661,897 35,000 20,000 $1.295,075 $ 160,502 411,760 159.400 2,060 733,722 382,158 35,000 Capital Future income tax asset Long-term note receivable 0 $1,150,880 Liabilities and shareholders' equity Current Accounts payable Bank loan-current portion Income taxes payable Bank loan-FirstBank of Canada Common shares Preferred shares Contributed surplus Retained earnings $ 158,318 41,998 44,609 244,925 93,434 900 20,300 4,000 931,516 956.716 $1.295,075 $130,146 72.000 92.920 295,066 130,664 900 20,300 4,000 699,950 725,150 $1,150,890 Cancellation of Common Shares On September 15, the company reacquired and cancelled 9 shares (3 from each of Jack, Joe, and Jamal). The redemption price was $1,035 per share. Jack was unsure of how to account for this transaction, and therefore did not make any entries as at year end for the redemption. Prior to the reacquisition, there were 900 shares outstanding. Convertible Bonds In order to obtain additional capital to finance the expansion, EJA issued $500,000 in 8%, 10-year convertible bonds on January 1, 2020, for $500,000 cash. Each $1,000 bond includes the right to purchase 1 share for $750 during the life of the bond. The current market rate for similar nonconvertible bonds is 9%. The fair value of the option using an option pricing model is $49,760. Purchase of Aircrafts and New Bank Debt of a Jack informed you of the fact that the December 31, 2020, statement of financial position does not include the acquisition of the new aircraft, or the new bank debt. Jack did not even record the journal entry for the first payment made on December 31, 2020. Bank Loan with the First Bank of Canada The total outstanding balance of $93,434 is due in full on January 15, 2021. Jack has left the total balance as long-term as at the December 31 year end because on January 3, 2021, he was able to renegotiate the loan on a long-term basis. Jack has provided you with a copy non-cancellable agreement to refinance the debt as January 3, 2021. Flight No. 877 On November 24, 2020, 26 passengers on Flight No. 877 were injured upon landing when the plane skidded off the runway. Fortunately, no one was injured seriously; however, personal injury suits were still filed on December 1, 2020, for damages totaling $50,000. Legal counsel has studied each suit and advised EJA management that it is probable (about a 60% chance) that they will lose the lawsuit. The loss could range anywhere between $20,000 and $50,000. If the lawsuit is lost, there is a 20% chance that EJA will have to pay $20,000, a 55% chance that it will have to pay $50,000, and a 25% chance that EJA will pay $35,000
