Subsequent Events your firm has been engaged to examine the financial statements of Alma den Corporation for the year 2010. The bookkeeper who maintains the financial records has prepared all the unaudited financial statements for the corporation since its organization on January 2, 2005. The client provides you with the information below. The supplementary information below is also provided.?

1. On May 1, 2010, the corporation issued at 95.4, $750,000 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 2008, the ending inventory was overstated by $183,000. The ending inventories for 2009 and

2010 were correctly computed.

(b) In 2010, accrued wages in the amount of $225,000 were omitted from the balance sheet, and these expenses were not charged on the income statement.

(c) In 2010, a gain of $175,000 (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 Alma den?s primary line, now being produced in a specially designed new plant. Because of manufacturing innovations, the competitor?s line will be of comparable quality but priced 50% below Alma den?s line. The competitor announced its new line on January 14, 2011. Alma den 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, 2011, prior to completion of the audit, of heavy damage because of a recent fire to one of Alma den?s two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail.

Analyze the above information to prepare a corrected balance sheet for Alma den in accordance with proper accounting and reporting principles. Prepare a description of any notes that might need to be prepared. The books are closed and adjustments to income are to be made through retained earnings.

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ALMADEN CORPORATION BALANCE SHEET DECEMBER 31, 2010 Liabilities Assets $ 962,400 1,439,500 4,650,600 $7,052,500 $1,881,100 Current liabilities Current assets Long-term liabilities Capital Other assets 5,171,400 $7,052,500 An analysis of current assets discloses the following. $ 571,000 Cash (restricted in the amount of $300,000 for plant expansion) Investments in land Accounts receivable less allowance of $30,000 Inventories (LIFO flow assumption) 185,000 480,000 645,100 $1,881,100 Other assets include: $ 62,400 Prepaid expenses Plant and equipment less accumulated depreciation of $1,430,000 4,130,000 Cash surrender value of life insurance policy Unamortized bond discount 84,000 34,500 162,300 252,000 Notes receivable (short-term) Goodwill Land 446,200 $5,171,400 Current liabilities include: $ 510,000 Accounts payable Notes payable (due 2013) Estimated income taxes payable 157,400 145,000 Premium on common stock 150,000 $ 962,400 Long-term liabilities include: Unearned revenue Dividends payable (cash) 8% bonds payable (due May 1, 2015) $ 489,500 200,000 750,000 $1,439,500 Capital includes: Retained earnings Capital stock, par value $10; authorized 200,000 shares, 184,000 shares issued $2,810,600 1,840,000 $4,650,600