Question 5 Part 1: Preparation and presentation of a balance sheet

Bumpy and Rotten Trading Limited, a company listed on the Bad Stock Exchange, is a trading and investment entity. The company trades exclusively in copper and steel components, and also has an investing arm.

You have just been appointed as the chief financial officer of Dumpy Trading Limited and your first task is to prepare the 2022 end of financial year balance sheet for Dumpy Trading Limited.

Before leaving his post, the former chief financial officer provided a summary of key information as below:

1. On September 1, 2022 the company sold some equipment with a historical cost of $50,000,000 for $25,000,000 cash. The company recorded a gain of $5,000,000 on this transaction. At the end of the financial year this transaction had not yet been recorded.
2. An independent assessor reported on October 31, 2022 that based on her analysis the value of the companys goodwill was $75,000,000.
3. Inventory recorded in the pre-adjustment trial balance (see table below) is valued at net realizable value. The historical cost of the inventory is $75,000,000.
4. The value of prepaid expenses to be paid in cash on January 1, 2023 is estimated to be $3,000,000.
5. Of the accounts receivable, $15,000,000 has been incorrectly recorded and will not be received for another 24 months.
6. The balance of Provision for Doubtful Debts should be $1,540,000 at the end of the financial year.
7. Of the long-term loans $12,000,000 are found to be due in the next 12 months.
8. The budget prepared by the former chief financial officer for the 2024 financial year indicates accrued expenses at the end of the financial year should total $4,000,000.
9. It has been found that a shareholder paid $3,000,000 of the call-up capital in arrears on June 1, 2022. The balance of called-up capital is always treated as being due within 12 months. This transaction has yet to be recorded.
10. During the current financial year, the company repurchased $4,000,000 of shares on the open market and cancelled $2,000,000 of existing treasury shares. These transactions have yet to be accounted for.
11. The company paid $3,000,000 of dividends in cash at the end of the financial year.
12. The company plans on issuing $23,000,000 of new shares in 2024.

The end of the financial year for the company is November 30. The company operates on a 12-month operating cycle.

The company has provided you the following list of accounts, and the trial balance totals per each account, as at end of their current final year: