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IVANHOE CORPORATION Trial Balance December 31, 2021 Debit Credit Cash $ 48,000 51,000 $ 2,500 Accounts receivable Allowance for doubtful accounts Merchandise inventory Investment in associate Investment at FVTOCI-equity 22,700 85,000 30,000 Land 90,000 Building 200,000 40,000 40,000 15,000 18.775 Accumulated depreciation-building Equipment Accumulated depreciation-equipment Accounts payable Income tax payable 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 4,500 126,025 100,000 110.775 5,000 Sales 750,000 370,000 180,000 Cost of goods sold Operating expenses Interest revenue Interest expense 375 6,250 Income tax expense 50,000 Total $1,172,950 $1,172,950 All transactions and adjustments for 2021 have been recorded and reported in the trial balance except for the items described below. Jan. 7 Issued 1,100 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. Mar. 16 Purchased 800 common shares of Osborne Inc., to be held for trading purposes, for $29 per share. July 1 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. Ivanhoe purchased the bonds to earn interest. Aug. 2 Sold the Osborne common shares for $30 per share. 5 Invested $20,000 in a money-market fund. Sept. 25 550 of the preferred shares issued on January 7 were converted into common shares. Oct. 24 Cashed in the money-market fund, receiving $20,000 plus $200 interest. Nov. 30 Obtained a $50,000 bank loan by issuing a three-year, 6% note payable. Ivanhoe 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. Dec. 1 Declared the annual dividend on the preferred shares on December 1 to shareholders of record on December 23, payable on January 15. 31 Ivanhoe owns 40% of RES. RES earned $22,100 and paid dividends of $1,600 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 $28,200. Ignore income tax calculation. Note that Ivanhoe has recorded $50,000 of income tax expense for the year to date. For the purposes of this question, ignore the income tax relating to other comprehensive income. Using the income statement accounts in the trial balance, calculate income before income tax. (Round answer to decimal places, eg. 5,275.) Income before income tax $ Note that Ivanhoe has recorded $50,000 of income tax expense for the year to date. Assuming Ivanhoe has a 32% income tax rate, prepare the journal entry to adjust income taxes for the year. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to decimal places, eg. 5,275.) Date Account/Description Debit Credit Dec. 31 (To record income tax expense.) e Textbook and Media Question Part Score --/1 Prepare the income statement for Ivanhoe. (Round answers to decimal places, eg. 5,275.) IVANHOE CORPORATION Income Statement $ Prepare the statement of changes in shareholders' equity for Ivanhoe. For the purposes of this question, ignore the income tax on other comprehensive income. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45). Round answers to decimal places, eg. 5,275.) IVANHOE CORPORATION Statement of Changes in Shareholders' Equity Preferred Shares Common Shares Retained Earnings Balance, January 1, 2021 $ $ $ Issued shares for cash Preferred shares converted Cash dividends-preferred Comprehensive income Balance, December 31, 2021 $ $ $ Accumulated Other Comprehensive Income Total $ $ $ $ Prepare the balance sheet for Ivanhoe. (List Current Assets in order of liquidity . List Property, Plant and Equipment in order of Land, Buildings and Equipment. Round answers to decimal places, eg. 5,275.) IVANHOE CORPORATION Balance Sheet Assets > > $ > > $ > Prepare the statement of changes in shareholders' equity for Ivanhoe. For the purposes of this question, ignore the income tax on other comprehensive income. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses eg. (45). Round answers to decimal places, eg. 5,275.) IVANHOE CORPORATION Statement of Changes in Shareholders' Equity Preferred Shares Common Shares Retained Earnings Balance, January 1, 2021 $ $ $ Issued shares for cash Preferred shares converted Cash dividends-preferred Comprehensive income Balance, December 31, 2021 $ $ $ Accumulated Other Comprehensive Income Total $ $ $ $ Prepare the balance sheet for Ivanhoe. (List Current Assets in order of liquidity . List Property, Plant and Equipment in order of Land, Buildings and Equipment. Round answers to decimal places, eg. 5,275.) IVANHOE CORPORATION Balance Sheet Assets > > $ > > $ >
