Wanda B. Rich is the CEO of Outlet Flooring, a discount provider of carpet, tile, wood, and laminate flooring. At the end of the year, the company’s accountant provides Wanda with the following information, before any adjustment. Accounts receivable $ 10,800,000 Estimated percentage uncollectible 2 % Allowance for uncollectible accounts $ 108,000 (credit) Operating income $ 2,800,000 Wanda has significant stock ownership in the company and, therefore, would like to keep the stock price high. Analysts on Wall Street expect the company to have operating income of $2,120,000. The fact that actual operating income is well above this amount will make investors happy and help maintain a high stock price. Meeting analysts’ expectations will also help Wanda keep her job. 2-a. After the adjustment is recorded in Part 1, what is the revised amount of operating income? Revised operating income Will Outlet Flooring still meet analysts’ expectations? multiple choice Yes No
Wanda B. Rich is the CEO of Outlet Flooring, a discount provider of carpet, tile, wood, and laminate flooring. At the end of the year, the company’s accountant provides Wanda with the following information, before any adjustment.
| Accounts receivable | $ | 10,800,000 | |
| Estimated percentage uncollectible | 2 | % | |
| Allowance for uncollectible accounts | $ | 108,000 | (credit) |
| Operating income | $ | 2,800,000 | |
Wanda has significant stock ownership in the company and, therefore, would like to keep the stock price high. Analysts on Wall Street expect the company to have operating income of $2,120,000. The fact that actual operating income is well above this amount will make investors happy and help maintain a high stock price. Meeting analysts’ expectations will also help Wanda keep her job.
2-a. After the adjustment is recorded in Part 1, what is the revised amount of operating income?
|
Will Outlet Flooring still meet analysts’ expectations?
multiple choice
-
Yes
-
No
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