Presented below is the comparative balance sheet for Diatessaron Inc, a private company reporting under ASPE, at December 31, 2021, and 2020 DIATESSARON INC. Balance Sheet December 31 Assets 2021 2020 Cash $67,000 $98,000 Accounts receivable 101.000 75,000 Inventory 205,000 155,500 101,500 0 Long-term investment Property, plant, and equipment Less: Accumulated depreciation 535,000 460,000 (162,500) (140,000) $648,500 $847,000 $57,500 $47.000 6,000 0 Liabilities and Shareholders' Equity Accounts payable Dividends payable Income tax payable Long-term notes payable Common shares Retained earnings 14,000 15,000 25,000 0 630,000 525,000 114,500 61,500 $847,000 $648,500 DIATESSARON INC. Income Statement Year Ended December 31, 2021 Sales $663,000 Cost of goods sold 432,000 Gross profit 231,000 $147,500 3,000 150,500 80,500 3,000 Operating expenses Loss on sale of equipment Profit from operations Interst expense Interest revenue Profit before income tax Income tax expense Profit (4,500) (1,500) 82,000 14,000 $68,000 Additional information: 2. 3. 4. Cash dividends of $15,000 were declared. A long-term investment was acquired for cash at a cost of $101.500. Depreciation expense is included in the operating expenses. The company issued 10,500 common shares for cash on March 2, 2021. The fair value of the shares was $10 per share. The proceeds were used to purchase additional equipment Equipment that originally cost $30,000 was sold during the year for cash. The equipment had a carrying value of $9,000 at the time of sale. The company issued a note payable for $28.000 and repaid $3,000 by year end. All purchases of inventory are on credit. 5. 6. 7 Additional information: 1 2 3. 4 Cash dividends of $15,000 were declared A long-term investment was acquired for cash at a cost of $101,500. Depreciation expense is included in the operating expenses. The company issued 10,500 common shares for cash on March 2, 2021. The fair value of the shares was $10 per share. The proceeds were used to purchase additional equipment Equipment that originally cost $30.000 was sold during the year for cash. The equipment had a carrying value of $9.000 at the time of sale The company issued a note payable for $28,000 and repaid $3,000 by year end. All purchases of inventory are on credit Accounts Payable is used only to record purchases of inventory 5. 6. a 7 8. Is it necessary to show both the proceeds from issuing a new note payable and the partial repayment of notes payable? Or is it cient to simply show the net increase or decrease in notes payable, as is done with accounts payable? Explain. BITTLE a *a mm MT T: O Word)