Your firm has been engaged to examine the financial statements of Nash Corporation for the year 2020. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2015. The client provides you with the information. Nash Corporation Balance Sheet December 31, 2020 Assets Liabilities Current assets $1,877,000 Current liabilities $971,000 Other assets 5,131,940 Long-term liabilities 1,474,000 Stockholders' equity 4,563,940 $7,008,940 $7,008,940 An analysis of current assets discloses the following. Cash (restricted in the amount of $301,000 for plant expansion) $563,000 Investments in land 182,000 Accounts receivable less allowance of $30,000 486,000 Inventories (LIFO flow assumption) 646,000 $1,877,000 Other assets include: $62,000 Prepaid expenses Plant and equipment less accumulated depreciation of $1,409,000 4,107,000 84,000 Cash surrender value of life insurance policy Unamortized bond discount Notes receivable (short-term) 17,940 163,000 Goodwill 249,000 Land 449,000 $5,131,940 Current liabilities include: $518,000 Accounts payable Notes payable (due 2023) 158,000 Estimated income taxes payable 144,000 Premium on common stock 151,000 $971,000 Long-term liabilities include: $496,000 Unearned revenue Dividends payable (cash) 198,000 8% bonds payable (due May 1, 2025) 780,000 $1,474,000 Stockholders' equity includes: $2,753,940 Retained earnings Common stock, par value $10; authorized 200,000 shares, 181,000 shares issued 1,810,000 $4,563,940 The supplementary information below is also provided. The supplementary information below is also provided. 1. On May 1, 2020, the corporation issued at 97.70, $780,000 of bonds to finance plant expansion. The long-term bond agreement provided for the annual payment of interest every May 1. The existing plant was pledged as security for the loan. Use the straight-line method for discount amortization. The bookkeeper made the following mistakes. In 2018, the ending inventory was overstated by $180,000. The ending inventories for 2019 and 2020 were correctly computed. . 2. a. C. 3. b. In 2020, accrued wages in the amount of $221,000 were omitted from the balance sheet, and these expenses were not charged on the income statement In 2020, a gain of $177,000 (net of tax) on the sale of certain plant assets was credited directly to retained earnings. A major competitor has introduced a line of products that will compete directly with Nash's primary line, now being produced in a specially designed new plant. Because of manufacturing innovations, the competitor's line will be of comparable quality but priced 50% below Nash's line. The competitor announced its new line on January 14, 2021. Nash indicates that the company will meet the lower prices that are high enough to cover variable manufacturing and selling expenses, but permit recovery of only a portion of fixed costs. You learned on January 28, 2021, prior to completion of the audit, of heavy damage because of a recent fire to one of Nash's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. 4. Analyze the above information to prepare a corrected balance sheet for Nash in accordance with proper accounting and reporting principles. Prepare a description of any notes that might need to be prepared. The books are closed and adjustments to income are to be made through retained earnings. (List Current Assets in order of liquidity.)