Question 1-70 marks ABC is an economic development corporation situated on XYZ First Nation. ABC has formed a company called ABC Band Limited and requires the financial statements to be prepared and analyzed for the year ended December 31, 2021. The following are the balances in the accounts at December 31 2020: Cash $507,000 Accounts Receivable $15,000 Inventory $5,000 Prepaid Rent $3,000 Equipment $40,000 Accumulated Depreciation - -$10,000 Equipment Land $50,000 Accounts payable $0 Long-term note payable, 5% $200,000 Common shares, 10,000 shares $350,000 outstanding Retained earnings $60,000 The following transactions and events occurred in 2021. Issued $100,000 of 5% preferred shares for cash. Sold the equipment at its written-down value (book value) for cash. Acquired new equipment for $200,000 cash. The new equipment has an estimated useful life of 20 years and no expected residual value. Purchased inventory for $50,000 cash from ordinary suppliers. Made cash sales of $200,000. The related cost of goods sold was $50,000. Purchased additional land for cash of $30,000. Jan. 1 Jan. 1 Jan. 1 Apr. 1 Aug. 1 Sept. 1 Oct. 31 Dec. 30 Dec. 31 Dec. 31 Paid the interest on the bank loan. Dec. 31 Recorded depreciation for the new equipment. Dec. 31 Paid cash of $4,000 for income taxes. All remaining accounts receivable were collected. Various operating expenses totaled $30,000. All were paid in cash except for $5,000 for utilities, which will be paid in January. Paid the annual dividend on the preferred shares, and a 5-cent dividend per common share. Question 1 (continued) Required (a) Using either journal entries or the transactions-based approach (tabular analysis), record the above transactions and events for 2021. (25 marks) (b) Prepare an income statement for the year 2021. (10 marks) (c) Prepare a statement of changes in equity for the year 2021. (5 marks) (d) Prepare a balance sheet as at December 31, 2021. (10 marks) (e) Prepare a Cash Flow Statement for the year December 31, 2021 (10 marks) (e) Using the financial statements you prepared, calculate the following: (10 marks) (i) Return on assets ratio (ii) Return on equity ratio (iv) Return on sales ratio (v) Net income to sales ratio (vi) Earnings per share (vii) Dividend payout ratio (xi) Current ratio (xii) Quick ratio (xiii) Debt to equity ratio (xiv) Debt to assets ratio Question 2-10 marks (2 marks each) You are on the Board of ABC Band Limited. The company recently sent you its annual financial statements. Required a) Why has the company done this? b) What information would you expect to get from the income statement? c) What information would you expect to get from the statement of retained earnings? d) What information would you expect to get from the balance sheet? e) What information would you expect to get from the Cash Flow Statement? Question 3 - 15 marks (5 marks each) 1. Based on the statements, provide some insight on ABC Band Limited's performance in F2021. 2. Based on the Ratio Analysis, provide additional insight on ABC Band Limited 's performance in F2021. 3. Based on the above two, as a Board Member, would you be satisfied with management's stewardship of ABC Bank Limited.