the following is the capital strueture and partial liablies of Waterton Wafles Watermelon and Worcestershire Co. at December 31, 2022:

Current Liabilities:

* Notes Payable.. .... $ 2,000,000

Other various current liabilities .... $5,000,000

Total Current Liabilities.... $ 7,000,000

Long-term Liabilities:

5% Convertible debentures due April 15, 2026.... $ 10,000,000

Total long-term debt... $ 10,000,000

Shareholders' Equity:

$4 Cumulative convertible preferred shares, non-par; 1,600,000 shares authorized; 580,000 issued and outstanding..... $ 12,000,000

Common Shares, non-par, 10,000,000 shares authorized, 3,490,000 shares issued and outstanding

...4.200,000

Contributed Surplus

.... 2,100,000

Retained Earnings.

..38,250.000

Total paid in Capital & Retained Earnings.

... $56,100,000

Total Shareholders' Equity.

... $50,650,000

ADDITIONAL INFORMATION:

a.The 5% convertible debentures were issued at their face value of $10,000,000 in 2020. The debentures are due in 2026 and until then are convertible into common stock of Waterton W's at the rate of 50 shares for each $500 debenture.

b.The $4 cumulative, convertible preferred shares were issued in 2021. On July 1, 2022, and on October 1, 2022, holders of the preferred shares converted 50,000 and 20,000 preferred shares, respectively, into common shares. Each preferred share is convertible into 2 shares of common stock.

c.On March 1, 2022, Waterton W's issued 400,000 shares of common stock for land and buildings.

d. On April 1, 2022, 300,000 common shares were cancelled.

d. Dividends on the prefered shares have been paid quartety (MachR3. uno 30, Soptember 30, &

December 31) through December 31, 2022.

e.Stock options were granted/written to the president of the corporation on January 1, 2022. Each of the 20,000 options permits the holder to purchase one share of common stock for $10 per share. The options are exercisable at any time after December 31, 2025 (within 10 years). The average market price of the shares during 2022 was $12.50. Waterton W's uses the "Treasury Share method" for accounting for stock options.

f. Net income of Waterton Waffles Watermelon and Worcestershire Co. for the year ended December 31, 2022, was $4,000,000. The income tax rate is 40%, and 10% rate of return after tax is normal for Waterton W's.