Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. question: brian darkes is cfo of adams pottery com

Question: Brian Darkes is CFO of Adams Pottery Company which produces wedding vases. It's near...

60.2K

Verified Solution

Question

Accounting

Question:

Brian Darkes is CFO of Adams Pottery Company which produces wedding vases. It's near year-end and Brian predicts that the net income for the year is not going to be as large as he has hoped. Because of the global pandemic, weddings have been dramatically downsized, postponed, or canceled and demand for wedding vases is way down. Concerned that the bank would question the lower reported net income, Brian decides to reduce the percentage used to estimate uncollectible accounts for the current year from 5 percent of credit sales to 1 percent of credit sales although bad debts have always been approximately 5 percent of the current year credit sales. The current year credit sales are $6,587,000.

Required:

1. (2 points) What is the effect on income before taxes of the percent change planned by Brian?

2. (2 points) What is the effect of the percent change on the total assets?

3. (1 point) Is this practice ethical? Should Brian reduce the percentage? Who are the parties affected if the percentage is reduced? Explain your answer.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Explain the anatomy of a jury trial and what happens during each stage of the trial.

General Management
Q

Two spheres S and S have radij R and 3R temperature I K and 7...

Physics
Q

A conducting rod of length L rotating in x z plane with constant angular velocity...

Physics
Q

Consider g(w) = w + 1 / w+6Determine the intervals on which g is concave...

Calculus
Q

58 69 3 3 2 1 y 414 1 23 g x x 3

Algebra
Q

Budgeted Income Statement and Supporting Budgets The budget director of Feathered Friends Inc.,...

Accounting
Q

The following is a partial trial balance for General Lighting Corporation as of December 31,...

Accounting
Q

The following transactions occurred during March 2024 for the Right Corporation. The company operates a...

Accounting
Q

For the following scenarios, please indicate the of each of the following transactions on total...

Accounting
Q

El Nio wind patterns affected the weather across the United States during the winter of...

Accounting
Q

On March 20, Yang Ltd.s petty cash fund of 1,200 is replenished when the fund...

Finance
Q

a bond has an average return of 8.9 percent with variance of .00529. What range...

Finance