The following is Glamour Corporation year-end adjusted trial balance dated December 31, 2021. (2) Prepare a Statement of Retained Earnings for the year ended December 31,2021 . (5 points) (3) Prepare a Balance Sheet dated December 31, 2021. (15 points) (4) Does the company appear to be liquid? Explain. Justify your conclusion with calculation of working capital and current ratio. (5 points) (5) Has the company been profitable in the past? Is the company profitable this year? Justify your conclusion with calculation of net income percentage and return on equity. (5 points) (6) Some people think that a company's retained earnings represent cash reserved for the payment of dividends. Are they correct? Explain. (10 points) (7) Discuss the relationship among the income statement, the statement of retained earnings, and the balance sheet. (10 points) EXERCISE 2 Sweety Inc. manufactures candy and sells only to retailers. It is not a publicly owned company and its financial statements a compant frequently must borrow money. Its creditors insist that the company provide them with unaudited financial statements at the end of each quarter. In October, management met to discuss the fiscal year ending next December 31 . Due to a sluggish economy, Sweety Inc. was having difficulty collecting its have difficulty borrowing the money it would need to boost production for Valentine's Day. Thus, the purpose of the meeting was to explore ways in which Sweety Inc. might improve its December 31 balance sheet. Some of the ideas discussed are as follows: 1. Offer customers purchasing Christmas candy a 10 percent discount if they make payment within 30 days. an allowance for overdue accounts. 3. For purposes of balance sheet presentation, combine all forms of cash, including cash equivalents, compensating balances, and unused lines of credit. 5. Present investments in marketable securities at their market value, rather than at cost. 6. Treat inventory as a financial asset and show it at current sales value. 7. On December 31, draw a large check against one of the company's bank accounts and deposit it in another of the company's accounts in a different bank. The check won't clear the first bank until after year-end. This will substantially increase the amount of cash in bank accounts at year-end. Instructions: Separately evaluate each of these proposals. Consider ethical issues as well as accounting issues. (5 points per each proposal, 35 points in total) The following is Glamour Corporation year-end adjusted trial balance dated December 31, 2021. (2) Prepare a Statement of Retained Earnings for the year ended December 31,2021 . (5 points) (3) Prepare a Balance Sheet dated December 31, 2021. (15 points) (4) Does the company appear to be liquid? Explain. Justify your conclusion with calculation of working capital and current ratio. (5 points) (5) Has the company been profitable in the past? Is the company profitable this year? Justify your conclusion with calculation of net income percentage and return on equity. (5 points) (6) Some people think that a company's retained earnings represent cash reserved for the payment of dividends. Are they correct? Explain. (10 points) (7) Discuss the relationship among the income statement, the statement of retained earnings, and the balance sheet. (10 points) EXERCISE 2 Sweety Inc. manufactures candy and sells only to retailers. It is not a publicly owned company and its financial statements a compant frequently must borrow money. Its creditors insist that the company provide them with unaudited financial statements at the end of each quarter. In October, management met to discuss the fiscal year ending next December 31 . Due to a sluggish economy, Sweety Inc. was having difficulty collecting its have difficulty borrowing the money it would need to boost production for Valentine's Day. Thus, the purpose of the meeting was to explore ways in which Sweety Inc. might improve its December 31 balance sheet. Some of the ideas discussed are as follows: 1. Offer customers purchasing Christmas candy a 10 percent discount if they make payment within 30 days. an allowance for overdue accounts. 3. For purposes of balance sheet presentation, combine all forms of cash, including cash equivalents, compensating balances, and unused lines of credit. 5. Present investments in marketable securities at their market value, rather than at cost. 6. Treat inventory as a financial asset and show it at current sales value. 7. On December 31, draw a large check against one of the company's bank accounts and deposit it in another of the company's accounts in a different bank. The check won't clear the first bank until after year-end. This will substantially increase the amount of cash in bank accounts at year-end. Instructions: Separately evaluate each of these proposals. Consider ethical issues as well as accounting issues. (5 points per each proposal, 35 points in total)