At the end of 2022, Shah Corp. underestimated its annual bad debts expense by $50,000. What is the effect of this error, if any, on total assets and total stockholders’ equity on 12/31/22? Total assets and total stockholders’ equity are both overstated by $50,000. Total assets and total stockholders’ equity are both understated by $50,000. Total assets and total stockholders’ equity are both correctly stated

At the end of 2022, Shah Corp. underestimated its annual bad debts expense by $50,000. What is the effect of this error, if any, on total assets and total stockholders’ equity on 12/31/22? Total assets and total stockholders’ equity are both overstated by $50,000. Total assets and total stockholders’ equity are both understated by $50,000. Total assets and total stockholders’ equity are both correctly stated

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 13EB: Fortune Accounting reports $1,455,000 in credit sales for 2018 and $1,678,430 in 2019. It has an...

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Dortmund Stockyard reports $896,000 in credit sales for 2018 and $802,670 in 2019. It has a $675,000 accounts receivable balance at the end of 2018, and $682,000 at the end of 2019. Dortmund uses the balance sheet method to record bad debt estimation at 8% during 2018. To manage earnings more favorably, Dortmund changes bad debt estimation to the income statement method at 6% during 2019. A. Determine the bad debt estimation for 2018. B. Determine the bad debt estimation for 2019. C. Describe a benefit to Dortmund Stockyard in 2019 as a result of its earnings management.
Aerospace Electronics reports $567,000 in credit sales for 2018 and $632,500 in 2019. They have a $499,000 accounts receivable balance at the end of 2018, and $600,000 at the end of 2019. Aerospace uses the income statement method to record bad debt estimation at 5% during 2018. To manage earnings more favorably, Aerospace changes bad debt estimation to the balance sheet method at 7% during 2019. A. Determine the bad debt estimation for 2018. B. Determine the bad debt estimation for 2019. C. Describe a benefit to Aerospace Electronics in 2019 as a result of its earnings management.
Marmol Corporation uses the allowance method for bad debts. During 2019, Marmol charged 50,000 to bad debt expense and wrote off 45,200 of uncollectible accounts receivable. These transactions resulted in a decrease in working capital of: a. 0 b. 4,800 c. 45,200 d. 50,000
Fortune Accounting reports $1,455,000 in credit sales for 2018 and $1,678,430 in 2019. It has an $825,000 accounts receivable balance at the end of 2018 and $756,000 at the end of 2019. Fortune uses the balance sheet method to record bad debt estimation at 7.5% during 2018. To manage earnings more favorably, Fortune changes bad debt estimation to the income statement method at 5.5% during 2019. A. Determine the bad debt estimation for 2018. B. Determine the bad debt estimation for 2019. C. Describe a benefit to Fortune in 2019 as a result of its earnings management.
A review of Anderson Corporations books indicates that the errors and omissions pertaining to the balance sheet accounts shown as follows had not been corrected during the applicable years. The net income per the books is: 2017, 10,000; 2018, 12,000; 2019, 15,000; and 2020, 20,000. No dividends were declared during these years and no adjustments were made to retained earnings. The Retained Earnings balance on December 31, 2020, is 50,000. Omissions Required: Determine the correct net income for the years 2017, 2018, 2019, and 2020, and the adjusted balance sheet accounts as of December 31, 2020. Ignore possible income tax effects.
The records containing several transactions incurred by Forbes Corporation at December 31, 2021 showed the following balances: Bad debts expense 2,750,000Freight out 4,000,000Cost of sales 46,350,000Loss on sale of equipment 2,000,000Loss on early retirement of long-term debt 3,000,000Sales 97,500,000Interest income 4,850,000Administrative expenses 11,250,000Finished goods inventory, January 1 60,000,000Sales commissions 6,000,000Finished goods inventory, December 31 55,000,000Income tax rate 30% What amount shall Forbes Corporation shall report as its net income for the year 2021?
Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity. a. Global used $19.6 million of its available cash to repay $19.6 million of its long-term debt. b. A warehouse fire destroyed $5.2 million worth of uninsured inventory. c. Global used $4.7 million in cash and $4.6 million in new long-term debt to purchase a $9.3 million building. d. A large customer owing $2.8 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment. e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by more than 46%. f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices. a. Global used $19.6 million of its available cash to repay $19.6…
Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity. a. Global used $19.6 million of its available cash to repay $19.6 million of its long-term debt. b. A warehouse fire destroyed $5.2 million worth of uninsured inventory. c. Global used $4.7 million in cash and $4.6 million in new long-term debt to purchase a $9.3 million building. d. A large customer owing $2.8 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment. e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by more than 46%. f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices. d. A large customer owing $2.8 million for products it already received…
Pineapple Company has recorded bad debts expense in the past at a rate of 1.5% of net sales. In 2021, Pineapple decides to increase the estimate to 2%. If the new rate has been used in prior years, cumulative bad debts expense would have been P380,000 instead of P285,000. In 2021, bad debts expense will be P120,000 instead of P90,000. What amount of bad debts should the company report in its statement of comprehensive income as a result of a change in the estimate? P.S. Answer is not 95,000
Pineapple Company has recorded bad debts expense in the past at a rate of 1.5% of net sales. In 2021, Pineapple decides to increase the estimate to 2%. If the new rate has been used in prior years, cumulative bad debts expense would have been P380,000 instead of P285,000. In 2021, bad debts expense will be P120,000 instead of P90,000. What amount of bad debts should the company report in its statement of comprehensive income as a result of a change in the estimate?a) P120,000b) P64,600c) P-0-d) P95,000 Please explain how you arrived with your answer. Thank you!
Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity. a. Global used $19.2 million of its available cash to repay $19.2 million of its long-term debt. b. A warehouse fire destroyed $4.7 million worth of uninsured inventory. c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building. d. A large customer owing $3.1 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment. e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by more than 51%. f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices. c. Global used $4.9 million in cash and $5.4 million in new long-term…
Consider the following potential events that might have occurred to Global on December 30, 2019. For each one, indicate which line items in Global's balance sheet would be affected and by how much. Also indicate the change to Global's book value of equity. a. Global used $19.2 million of its available cash to repay $19.2 million of its long-term debt. b. A warehouse fire destroyed $4.7 million worth of uninsured inventory. c. Global used $4.9 million in cash and $5.4 million in new long-term debt to purchase a $10.3 million building. d. A large customer owing $3.1 million for products it already received declared bankruptcy, leaving no possibility that Global would ever receive payment. e. Global's engineers discover a new manufacturing process that will cut the cost of its flagship product by more than 51%. f. A key competitor announces a radical new pricing policy that will drastically undercut Global's prices. Global used $19.2 million of its available cash to repay $19.2 million…