Marin Inc. follows IFRS and has adopted the policy of classifying interest paid as operating activities and
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Marin Inc. follows IFRS and has adopted the policy of classifying interest paid as operating activities and dividends paid as financing activities. Comparative SFP accounts of Marin Inc., and its statement of income for the year ending December 31, 2020, follow:
December 31 | ||||||||||||
2020 | 2019 | Change | ||||||||||
Cash | $46,000 | $52,000 | $(6,000 | ) | ||||||||
Cash equivalents (Note 1) | 36,000 | 46,500 | (10,500 | ) | ||||||||
Accounts receivable | 357,000 | 294,000 | 63,000 | |||||||||
Prepaid insurance | 18,000 | 36,300 | (18,300 | ) | ||||||||
Inventory | 412,000 | 369,600 | 42,400 | |||||||||
Supplies | 13,000 | 17,000 | (4,000 | ) | ||||||||
Long-term investment, at equity (Note 7) | 416,000 | 403,000 | 13,000 | |||||||||
Land (Note 6) | 632,000 | 506,000 | 126,000 | |||||||||
Buildings (Note 3) | 1,310,000 | 1,280,000 | 30,000 | |||||||||
Accumulated depreciation—buildings | (400,000 | ) | (360,000 | ) | (40,000 | ) | ||||||
Equipment (Note 4) | 628,000 | 636,100 | (8,100 | ) | ||||||||
Accumulated depreciation—equipment | (160,000 | ) | (135,000 | ) | (25,000 | ) | ||||||
Patent | 100,000 | 100,000 | –0– | |||||||||
Accumulated amortization | (40,000 | ) | (35,000 | ) | (5,000 | ) | ||||||
$3,368,000 | $3,210,500 | $157,500 | ||||||||||
Bank overdrafts (temporary) | $0 | $90,500 | $(90,500 | ) | ||||||||
Accounts payable | 169,000 | 161,000 | 8,000 | |||||||||
Income tax payable | 26,000 | 35,000 | (9,000 | ) | ||||||||
Accrued liabilities | 57,000 | 47,000 | 10,000 | |||||||||
Dividends payable | 18,000 | 48,000 | (30,000 | ) | ||||||||
Long-term notes payable | 420,000 | 460,000 | (40,000 | ) | ||||||||
Bonds payable | 999,000 | 995,000 | 4,000 | |||||||||
Preferred shares (Note 2) | 486,000 | 380,000 | 106,000 | |||||||||
Common shares | 740,000 | 668,000 | 72,000 | |||||||||
Retained earnings | 453,000 | 326,000 | 127,000 | |||||||||
$3,368,000 | $3,210,500 | $157,500 |
Income Statement
Revenues | |||||
Sales revenue | $1,003,000 | ||||
Investment income | 90,000 | $1,093,000 | |||
Expenses and Losses | |||||
Cost of goods sold | 311,000 | ||||
Sales commissions expense | 112,000 | ||||
Operating expenses (Note 5) | 166,000 | ||||
Salaries and wages expense | 108,000 | ||||
Interest expense | 99,000 | ||||
Loss on disposal of equipment (Note 4) | 11,000 | ||||
Income tax expense | 96,000 | 903,000 | |||
Net Income | $190,000 |
The following is additional information about Marin’s transactions during the year ended December 31, 2020.
1. | The cash equivalents are typically term deposits that are very liquid and mature on average in 60 days. The bank overdrafts are temporary and reverse within a few days. Marin has opted to show these as cash and cash equivalents on its statement of cash flows. | |
2. | During the year, preferred shares with a carrying amount of $18,000 were converted to common shares. | |
3. | There were no disposals of buildings during the year 2020. | |
4. | Equipment with an original cost of $46,000 and carrying amount of $14,000 was sold at a loss during the year. | |
5. | All depreciation and amortization expense is included in operating expenses. | |
6. | During the year, Marin obtained land with a fair value of $100,000 in exchange for its preferred shares. | |
7. | Investment income includes the equity earnings of $62,000 from a long-term investment accounted for using the equity method and from interest revenue on the short-term investments referred to in note 1 above. |
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