Kruma Company sells clothes and fashion accessories through its chain of retail stores. The shareholders' equity...

  
 
 
 
 

 

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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

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Ans Date Jan 28 2020 Account titles and explanation Interest receivable Reta... View the full answer