Metlock Corporation Balance Sheet December 31, 2020
Assets				Liabilities
Current assets		$1,888,000		Current liabilities		$970,000
Other assets		5,114,480		Long-term liabilities		1,471,000
				Stockholders equity		4,561,480
		$7,002,480				$7,002,480

An analysis of current assets discloses the following.
Cash (restricted in the amount of $301,000 for plant expansion)		$582,000
Investments in land		185,000
Accounts receivable less allowance of $29,000		479,000
Inventories (LIFO flow assumption)		642,000
		$1,888,000
Other assets include:
Prepaid expenses		$62,000
Plant and equipment less accumulated depreciation of $1,411,000		4,069,000
Cash surrender value of life insurance policy		84,000
Unamortized bond discount		51,480
Notes receivable (short-term)		159,000
Goodwill		248,000
Land		441,000
		$5,114,480
Current liabilities include:
Accounts payable		$518,000
Notes payable (due 2023)		159,000
Estimated income taxes payable		146,000
Premium on common stock		147,000
		$970,000
Long-term liabilities include:
Unearned revenue		$495,000
Dividends payable (cash)		196,000
8% bonds payable (due May 1, 2025)		780,000
		$1,471,000
Stockholders equity includes:
Retained earnings		$2,701,480
Common stock, par value $10; authorized 200,000 shares, 186,000 shares issued		1,860,000
		$4,561,480

The supplementary information below is also provided.

1.		On May 1, 2020, the corporation issued at 93.40, $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.
2.		The bookkeeper made the following mistakes.
		a.	In 2018, the ending inventory was overstated by $184,000. The ending inventories for 2019 and 2020 were correctly computed.
		b.	In 2020, accrued wages in the amount of $220,000 were omitted from the balance sheet, and these expenses were not charged on the income statement.
		c.	In 2020, a gain of $173,000 (net of tax) on the sale of certain plant assets was credited directly to retained earnings.
3.		A major competitor has introduced a line of products that will compete directly with Metlocks primary line, now being produced in a specially designed new plant. Because of manufacturing innovations, the competitors line will be of comparable quality but priced 50% below Metlocks line. The competitor announced its new line on January 14, 2021. Metlock 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.
4.		You learned on January 28, 2021, prior to completion of the audit, of heavy damage because of a recent fire to one of Metlocks two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail.