Question No 1: 8 Marks The Max Corporation is negotiating a loan for expansion purposes and the bank requires financial statements. Before closing the accounting records for the year ended December 31, 2018, Max's comptroller prepared the following financial statements: MAX CORPORATION Balance Sheet At December 31, 2018 (Rs. in 000s) Assets Cash $ 275 Marketable securities 78 Accounts receivable 487 Inventories 425 Allowance for doubtful accounts (50) Property, plant, and equipment, net 160 Total assets $1.375 Liabilities and Shareholders' Equity Accounts payable and accrued liabilities $ 420 Notes payable 200 Common shares 260 Retained earnings 495 Total liabilities and shareholders' equity $1,375MAX CORPORATION Income Statement For the Year Ended December 31, 2018 (Rs. in 000s) Net sales $1,580 Expenses: Cost of goods sold $755 Selling and administrative 385 Miscellaneous 129 Income taxes 100 Total expenses 1,369 Net income $ 211 Additional information: 1. The company's common shares are traded on the Pakistan Stock Exchange. 2. The investment portfolio consists of short-term investments valued at $57,000. The remaining investments will not be sold until the year 2021. 3. Miscellaneous expense represents the before-tax loss from damages caused by an earth quake. The event is considered to be both unusual and infrequent. 4. Notes payable consist of two notes: Note 1: $80,000 face value dated September 30, 2018. Principal and interest at 10 percent are due on September 30, 2019.Note 2: $120,000 face value dated April 30, 2020. Principal is due in two equal instalments of $60,000 plus interest on the unpaid balance. The two payments are scheduled for April 30, 2019, and April 30, 2020. Interest on both loans has been correctly accrued and is included in accrued liabilities on the balance sheet and selling and administrative expenses on the income statement. 5. Selling and administrative expenses include a $90,000 charge incurred by the company in restructuring some of its operations. The amount of the charge is material