Reference no: EM132920717

Question - Consider - Circle Ltd's balance sheet based on the exit price at the beginning of the year:

The building was purchased for $ 90 000 and shares and notes were issued when the general price index was 90 on January 1, Year 9. The starting inventory had an historical cost of $ 5 each. The FIFO basis was used. The general price index is 100 at the beginning of the year. The following events are listed in chronological order for Year 10.

1. Purchased on account of 5000 units of inventory at a price of $ 6 each. Exit $ 15 each. General price index is 105.

2. Sold on an account of 5000 units for $ 15 each. The general price index is 105.

3. At the end of the year, the current building value is $ 200 000 and the land value is $ 20 000. The selling price of the inventories has increased to $ 19 each. The market price of the stock investment is $ 25,000. The market price for the notes was $ 45,032 as of December 31. The current interest rate is 12%. The average market interest rate was 11% for the year. The remaining useful life of the notes was 8 years as of December 31.

4. On December 31, half of the land was sold for $ 10,000.

5. On December 31, $ 15,000 in operating expenses is paid. $ 5000 interest, which is not included in the $ 15 000, is also paid.

6. The general price index at the end of the year was 120. The average for the year was 108.

Required - Prepare journal entries to record the above events, as well as a financial performance report for Year 10 and a statement of financial position for December 31, Year 10, under the Exit price method.