The following balance sheets have been prepared as at December 31, Year 6, for Kay Corp....

  

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The following balance sheets have been prepared as at December 31, Year 6, for Kay Corp. and Adams Ventures: Kay Adams Cash 62,000 31,000 Accounts receivable 84,000 173,000 Inventory 605,000 403,000 Property and plant 1,404,000 903,000 Investment in Adams 362,000 0 2,517,000 1,510,000 Current liabilities 402,000 152,000 Bonds payable 502,500 602,000 908,000 Common shares Retained earnings 454,000 704,500 302,000 2,517,000 1,510,000 Additional Information Kay acquired its 40% interest in Adams for $362,000 in Year 2, when Adams's retained earnings amounted to $172,000. The acquisition differential on that date was fully depleted by the end of Year 6. In Year 5, Kay sold land to Adams and recorded a gain of $62,000 on the transaction. Adams is still using this land. The December 31, Year 6, inventory of Kay contained a profit recorded by Adams amounting to $37,000. On December 31, Year 6, Adams owes Kay $31,000. Kay has used the cost method to account for its investment in Adams. Use income tax allocation at a rate of 40%, but ignore income tax on the acquisition differential, acquisition differential on that date was fully depleted by the end of Year 6. In Year 5, Kay sold land to Adams and recorded a gain of $62,000 on the transaction. Adams is still using this land. The December 31, Year 6, inventory of Kay contained a profit recorded by Adams amounting to $37,000. On December 31, Year 6, Adams owes Kay $31,000. Kay has used the cost method to account for its investment in Adams. Use income tax allocation at a rate of 40%, but ignore income tax on the acquisition differential. Required: Assuming that the investment in Adams is a joint operation and is reported using proportionately adjusted financial statements. Prepare the balance sheet for Kay as at December 31, Year 6. The following balance sheets have been prepared as at December 31, Year 6, for Kay Corp. and Adams Ventures: Kay Adams Cash 62,000 31,000 Accounts receivable 84,000 173,000 Inventory 605,000 403,000 Property and plant 1,404,000 903,000 Investment in Adams 362,000 0 2,517,000 1,510,000 Current liabilities 402,000 152,000 Bonds payable 502,500 602,000 908,000 Common shares Retained earnings 454,000 704,500 302,000 2,517,000 1,510,000 Additional Information Kay acquired its 40% interest in Adams for $362,000 in Year 2, when Adams's retained earnings amounted to $172,000. The acquisition differential on that date was fully depleted by the end of Year 6. In Year 5, Kay sold land to Adams and recorded a gain of $62,000 on the transaction. Adams is still using this land. The December 31, Year 6, inventory of Kay contained a profit recorded by Adams amounting to $37,000. On December 31, Year 6, Adams owes Kay $31,000. Kay has used the cost method to account for its investment in Adams. Use income tax allocation at a rate of 40%, but ignore income tax on the acquisition differential, acquisition differential on that date was fully depleted by the end of Year 6. In Year 5, Kay sold land to Adams and recorded a gain of $62,000 on the transaction. Adams is still using this land. The December 31, Year 6, inventory of Kay contained a profit recorded by Adams amounting to $37,000. On December 31, Year 6, Adams owes Kay $31,000. Kay has used the cost method to account for its investment in Adams. Use income tax allocation at a rate of 40%, but ignore income tax on the acquisition differential. Required: Assuming that the investment in Adams is a joint operation and is reported using proportionately adjusted financial statements. Prepare the balance sheet for Kay as at December 31, Year 6.

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Kay Corp Balance Sheet As at December 31 Year 6 Cash Accounts receivable Inventory Property and pla... View the full answer