Morning Dews Company was started on January 1, 2021. During its first year of operations, the company had a choice of ac

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Morning Dews Company Was Started On January 1 2021 During Its First Year Of Operations The Company Had A Choice Of Ac 1 (22.33 KiB) Viewed 18 times

Morning Dews Company Was Started On January 1 2021 During Its First Year Of Operations The Company Had A Choice Of Ac 2 (46.62 KiB) Viewed 18 times

Morning Dews Company Was Started On January 1 2021 During Its First Year Of Operations The Company Had A Choice Of Ac 3 (25.95 KiB) Viewed 18 times

Morning Dews Company Was Started On January 1 2021 During Its First Year Of Operations The Company Had A Choice Of Ac 4 (48.93 KiB) Viewed 18 times

Morning Dews Company was started on January 1, 2021. During its first year of operations, the company had a choice of accounting policies. The chief financial offer identified the following as possible alternatives and underlying assumptions estimates for each (Click the loon to view the possible alternatives and underlying assumptions/estimates.) The following are the actual transactions for the first three years of operations (Click the icon to view the transactions) Required CED Requirement a. Denve net income for 2021, 2022, and 2023 Ignore income taxes Begin by computing net income for 2021, 2022, and 2023 using Accounting Policy Set A Accounting Policy Set A 2021 2023 2022 14.500.000 Sales 13.500,000 15,300,000 Cost of goods sold
Transactions Sales (all on accounts) Inventory purchases (paid immediately) Ending inventory value, FIFO Ending inventory value, average cost Collections Amounts actually written off W Warranties actually paid Estimated warranties payable ending balance based on aging analysis of sales Depreciation expense All other operating expenses (paid immediately) $ 2021 2022 2023 13,500,000 $14,500,000 $ 15,300,000 6,000,000 3,000,000 3,200,000 1,800,000 1,850,000 2,000,000 1,730,000 1,550,000 2,000,000 12,000,000 13,300,000 12,810,000 400,000 450,000 700,000 120,000 500,000 525,000 835,000 1,350,000 1,886,000 700,000 700,000 700,000 2,800,000 3,200,000 3,400,000 I
- X Possible alternatives and underlying assumptions/estimates Accounting policy set A Accounting policy set B Inventory valuationi FIFO Average cost Bad debts 4% of sales Allowance: 5% of closing gross accounts receivable Allowance: An analysis of sales and repairs Warranties 7% of sales Done Print
Required Required a. Derive net income for 2021, 2022, and 2023. Ignore income taxes. b. What is the cumulative income for the three years for the two sets of accounting policies? What does this tell us about the closing balance sheet at the end of the third year? F c. What are the cumulative operating cash flows for the three years for both sets of accounting policies? Why are these cumulative cash flows the same for the two sets of policies? d. Carefully explain why the net incomes for each of the three years under review are not the same. What does this tell us about accruals and allocation methods? I