Kruma Company sells clothes and fashion accessories through its chain of retail stores. The shareholders' equity...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Kruma Company sells clothes and fashion accessories through its chain of retail stores. The shareholders' equity section of Kruma Company's statement of financial position as at December 31, 2020, shows the following information. Kruma Company Statement of Financial Position (partial) As at December 31, 2020 Shareholders' Equity Contributed Capital Preferred Shares, noncumulative, 5%, $100, 150,000 shares authorized, 24,000 shares issued and outstanding Common Shares, unlimited shares authorized, 400,000 shares issued and outstanding Total Contributed Capital Retained Earnings Total Shareholders' Equity On January 28, 2021, Kruma discovered an accounting mistake made in 2020. Accrual of interest revenue was understated by $54,000 because interest receivable and interest revenue of $60,000 were mistakenly recorded as $6,000. Sales Revenue Interest Revenue Unrealized Gain on Trading Investments Gain on Sale of Discontinued Operations Loss on Sale of Assets from Continuing Operations $2,400,000 During 2021, Kruma earned and incurred the following revenue and expenses (excluding income tax expenses). Kruma's tax rate is 30%. $1,785,000 45,000 12,000 400,000 2,800,000 1,500,000 4,300,000 90,000 16,000 During 2021, Kruma earned and incurred the following revenue and expenses (excluding income tax expenses). Kruma's tax rate is 30%. Sales Revenue Interest Revenue Unrealized Gain on Trading Investments Gain on Sale of Discontinued Operations Loss on Sale of Assets from Continuing Operations Loss on Foreign Currency Translation Loss from Operating Discontinued Operations Cost of Goods Sold Selling Expenses Administrative Expenses Interest Expense $1,785,000 45,000 12,000 90,000 16,000 30,000 200,000 966,000 250,000 253,000 1,000 On October 1, 2021, Kruma issued an additional 20,000 common shares for $20,000. There was no other change in the number of common or preferred shares. Kruma paid $120,000 dividends to preferred shareholders, but no dividend to common shareholders in 2021. The preferred shares are not convertible. The company does not have any outstanding securities that can be converted into common shares. Required a) Record the journal entry to correct the mistake related to the understatement of interest receivable and interest revenue in 2020. Date Account Title and Explanation Debit b) Prepare an income statement under ASPE for Kruma for the year ended December 31, 2021. Chapter 6 Credit c) Prepare a statement of comprehensive income by function under IFRS for Kruma for the year ended December 31, 2021. Present the basic and diluted earnings per share calculated based on net income (loss) at the bottom of the statement of comprehensive income. Do not separate earnings per share into continuing operations and discontinued operations. Also show detailed calculations of weighted average number of common shares and earnings per share. Date 2021 Actual Number of Shares Fraction of Year statements Weighted Average Number of Shares Prepare a statement of retained earnings under ASPE for Kruma for the year ended December 31, 2021. e) Prepare a statement of changes in equity under IFRS for Kruma for the year ended December 31, 2021. f) Prepare the shareholders' equity section of Kruma's balance sheet under ASPE as at December 31, 2021. f) Prepare the shareholders' equity section of Kruma's balance sheet under ASPE as at December 31, 2021. Chapter 6 Corporations: The Financial Statements g) Prepare the shareholders' equity section of Kruma's statement of financial position under IFRS as at December 31, 2021. 259 h) In the table below, calculate the given ratios for Kruma's common shares as at December 31, 2021. Assume that the market price of Kruma's common shares on that day is equal to $4.50. Book Value per Common Shares Dividend Yield Price-Earnings Ratio Kruma Company sells clothes and fashion accessories through its chain of retail stores. The shareholders' equity section of Kruma Company's statement of financial position as at December 31, 2020, shows the following information. Kruma Company Statement of Financial Position (partial) As at December 31, 2020 Shareholders' Equity Contributed Capital Preferred Shares, noncumulative, 5%, $100, 150,000 shares authorized, 24,000 shares issued and outstanding Common Shares, unlimited shares authorized, 400,000 shares issued and outstanding Total Contributed Capital Retained Earnings Total Shareholders' Equity On January 28, 2021, Kruma discovered an accounting mistake made in 2020. Accrual of interest revenue was understated by $54,000 because interest receivable and interest revenue of $60,000 were mistakenly recorded as $6,000. Sales Revenue Interest Revenue Unrealized Gain on Trading Investments Gain on Sale of Discontinued Operations Loss on Sale of Assets from Continuing Operations $2,400,000 During 2021, Kruma earned and incurred the following revenue and expenses (excluding income tax expenses). Kruma's tax rate is 30%. $1,785,000 45,000 12,000 400,000 2,800,000 1,500,000 4,300,000 90,000 16,000 During 2021, Kruma earned and incurred the following revenue and expenses (excluding income tax expenses). Kruma's tax rate is 30%. Sales Revenue Interest Revenue Unrealized Gain on Trading Investments Gain on Sale of Discontinued Operations Loss on Sale of Assets from Continuing Operations Loss on Foreign Currency Translation Loss from Operating Discontinued Operations Cost of Goods Sold Selling Expenses Administrative Expenses Interest Expense $1,785,000 45,000 12,000 90,000 16,000 30,000 200,000 966,000 250,000 253,000 1,000 On October 1, 2021, Kruma issued an additional 20,000 common shares for $20,000. There was no other change in the number of common or preferred shares. Kruma paid $120,000 dividends to preferred shareholders, but no dividend to common shareholders in 2021. The preferred shares are not convertible. The company does not have any outstanding securities that can be converted into common shares. Required a) Record the journal entry to correct the mistake related to the understatement of interest receivable and interest revenue in 2020. Date Account Title and Explanation Debit b) Prepare an income statement under ASPE for Kruma for the year ended December 31, 2021. Chapter 6 Credit c) Prepare a statement of comprehensive income by function under IFRS for Kruma for the year ended December 31, 2021. Present the basic and diluted earnings per share calculated based on net income (loss) at the bottom of the statement of comprehensive income. Do not separate earnings per share into continuing operations and discontinued operations. Also show detailed calculations of weighted average number of common shares and earnings per share. Date 2021 Actual Number of Shares Fraction of Year statements Weighted Average Number of Shares Prepare a statement of retained earnings under ASPE for Kruma for the year ended December 31, 2021. e) Prepare a statement of changes in equity under IFRS for Kruma for the year ended December 31, 2021. f) Prepare the shareholders' equity section of Kruma's balance sheet under ASPE as at December 31, 2021. f) Prepare the shareholders' equity section of Kruma's balance sheet under ASPE as at December 31, 2021. Chapter 6 Corporations: The Financial Statements g) Prepare the shareholders' equity section of Kruma's statement of financial position under IFRS as at December 31, 2021. 259 h) In the table below, calculate the given ratios for Kruma's common shares as at December 31, 2021. Assume that the market price of Kruma's common shares on that day is equal to $4.50. Book Value per Common Shares Dividend Yield Price-Earnings Ratio
Expert Answer:
Answer rating: 100% (QA)
Ans Date Jan 28 2020 Account titles and explanation Interest receivable Reta... View the full answer
Related Book For
Intermediate Accounting Volume 1
ISBN: 978-1119496496
12th Canadian edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
Posted Date:
Students also viewed these accounting questions
-
Healey Corporation's statement of financial position as at December 31, 2014, showed the following amounts: Cash ............ $100 Accounts Receivable .... $600 Land .......... $1,000 Accounts...
-
Healey Corporation's statement of financial position as at December 31, 2017, showed the following amounts: Cash $100; Accounts Receivable $600; Land $1,000; Accounts Payable $300; Bonds Payable...
-
Healey Corporations statement of financial position as at December 31, 2020, showed the following amounts: Cash $100; Accounts Receivable $600; Land $1,000; Accounts Payable $300; Bonds Payable $500;...
-
The following are selected 2023 transactions of Ayayai Corporation. Sept. 1 Oct. 1 1 Purchased inventory from Indigo Ltd. on account for $47,200. Ayayai uses a periodic inventory system. Issued a...
-
If the firms required rate of return is 14 percent, what is the net present value of the following project? Year Cash Flow 0 .......... $(75,000) 1 .......... 50,000 2 .......... 40,000
-
Write a document in which: Provide examples of the different types of relationships between supplier and buyer. Discuss the advantages and disadvantages of each relationship. Answer the question: In...
-
What evidence is available to the auditor in determining (a) "market" when securities are accounted for on the cost basis and (b) the value of underlying net assets when securities are accounted for...
-
The following is a list of costs that were incurred in the production and sale of boats: a. Commissions to sales representatives, based upon the number of boats sold. b. Cost of boat for grand prize...
-
Complete the square and determine the vertex for the following function. s(x) = -2x - 16x-29 Complete the square.
-
A restaurant serves 30 guests in four hours and 3 servers (labor), the labor rate is $20/hour/server, and consumes $500 worth of food and other raw materials, and $50 of energy. Calculate...
-
A firm has a current debt-equity ratio of 2/3. It is worth $10 billion, of which $4 billion is debt. The firms overall cost of capital is 12%, and its debt currently pays an (expected) interest rate...
-
For each of the following, decide whether there has been a valid offer: A . Would you like to buy my cabin in Maine? Its a beautiful piece of lakefront property and could sell for more than...
-
How should any one of the airplanes described in Problem 2 fly in order to produce the maximum charge separation between its wing tips? (Consider both the direction of motion and the orientation of...
-
Liz, a graduate MBA student at a prestigious business school, received three job offers late in April just before her May graduation. On April 30 she accepted the job at ABC Corp., which she...
-
The Air Force Thunderbirds aerial demonstration team is performing at an air show located on Earth's magnetic equator. In what directions can the airplanes fly so that there is no charge separation...
-
Instead of two firms, as in Question 4.1, three firms now face the inverse market demand curve, \(p=100-5 Q\), where \(Q=q_{1}+q_{2}+q_{3}\), and each of the firms has a constant marginal cost of 10...
-
1.3 Draw the corresponding bases and justify your ranking in the space below. Include any resonances structures. Ho Ho Ho He HD HD HE O. HE HE O. OHA -HA LOHA -HB OHA -Hc . OHA -HD HE O -HE
-
State whether each of the following will increase or decrease the power of a one-way between-subjects ANOVA. (a) The effect size increases. (b) Mean square error decreases. (c) Mean square between...
-
January 1, 2020, Gordon Co. enters into a contract to sell a customer a wiring base and a shelving unit that sits on the base in exchange for $3,000. The contract requires delivery of the base first...
-
Staj Co., a clothing manufacturer, is preparing its statement of financial position at December 31, 2020. For each of the following amounts as at December 31, 2020, state whether the amount is (a)...
-
Use the annual reports and/or the audited annual financial statements of Brookfield Office Properties Inc. for the year ended December 31, 2015, and of Mainstreet Equity Corp. for the year ended...
-
Is wavelike motion an example of conservative or diffusive motion?
-
Often a linearly sloped beach is not a good model. Waves coming from deep water up a gradually shelving beach are better approximated by assuming a parabolic shape like that shown in Figure P7.6...
-
For an unbounded fluid, the speed of sound is a thermodynamic property. What is its definition?
Study smarter with the SolutionInn App