4698-bb2a-4c6cbc82a5b8#/question/ Question 8 of 8 -/30 View Policies Current Attempt in Progress A combined statement of income and retained earnings for Riverbed Ltd. for the year ended December 31, 2020, follows. (As a private company, Riverbed has elected to follow ASPE.) Also presented are three unrelated situations involving accounting changes and the classification of certain items as ordinary or unusual. Each situation is based on the combined statement of income and retained earnings of Riverbed Ltd. Riverbed Ltd. Combined Statement of Income and Retained Earnings For the Year Ended December 31, 2020 Sales revenue $ 5.780,000 Cost of goods sold 2,810.000 Gross profit 2.970,000 Selling, general, and administrative expenses 1.700.000 Income before income tax 1.270,000 Income tax expense 444,500 Income before unusual item 825,500 Loss from tornado (net of taxes) 536.575 Net income 288.925 Retained earnings, January 1 1,114,425 Retained earnings, December 31 $ 1,403,350 For each of the three unrelated situations, prepare a revised confined statement of income and retained earnings for Riverbed Ltd. The company has a 35% income tax rate. Situation 1. In late 2020, the company discontinued its apparel fabric division. The loss on the disposal of this discontinued division amounted to $640,000. This amount was included as part of selling general, and administrative expenses. Before its disposal, the division reported the following for 2020: sales revenue of $1.18 million cost of goods sold of $590,000; and selling general, and administrative expenses of $460,200. (Round answers to decimal places, es. 5.275.) Riverbed Ltd. Combined Statement of income and Retained Earnings For the Year Ended December 31, 2020 Sales Revenue 4600000 Cost of Goods Sold 2220000 Gross Proh/LO) 2380000 Sein General and Administrative Expenses 5998 Income before Income Tax and Discontinued Operations 1780200 Other Expenses and loses 698-bb2a-4c6cbc82a5b8#/question/ Jestion 8 of 8 -/30 e Textbook and Media Situation 2. At the end of 2020, the company's management decided that the estimated loss rate on uncollectible accounts receivable was too low. The loss rate used for the years 2019 and 2020 was 1.3% of total sales revenue, and owing to an increase in the write off of uncollectible accounts, the rate was raised to 4.0% of total sales revenue. The amount recorded in Bad Debt Expense under the heading Selling, General, and Administrative Expenses for 2020 was $75,140 and for 2019 it was $72,000. (Round answers to decimal places, eg. 5.275.) Riverbed Ltd. Combined Statement of Income and Retained Earnings $ $ e Textbook and Media Situation 3. On January 1, 2018, the company acquired machinery at a cost of $600,000. The company adopted the declining balance method of depreciation at a rate of 30% for this machinery, and had been recording depreciation over an estimated life of 10 years, with no residual value. At the beginning of 2020, a decision was made to adopt the straight-line method of depreciation for this machinery to better match expenses to their related revenues. Depreciation for 2020, based on the Straight-line method, was included in selling 38-bb2a-4c6cbc82a5b8#/question/7 estion 8 of 8 - / 30 $ e Textbook and Media Situation 3. On January 1, 2018, the company acquired machinery at a cost of $600,000. The company adopted the declining. balance method of depreciation at a rate of 30% for this machinery, and had been recording depreciation over an estimated life of 10 years, with no residual value. At the beginning of 2020. a decision was made to adopt the straight-line method of depreciation for this machinery to better match expenses to their related revenues. Depreciation for 2020, based on the straight-line method, was included in selling general, and administrative expenses. (Hint: a change in depreciation method is considered a change in estimate, not a change in accounting policy.) (Round answers to 0 decimal places, eg. 5,275.) Riverbed Ltd. Combined Statement of Income and Retained Earnings $ e Textbook and Media Sare for at Last saved 4 days ago Saved work will be auto submitted the Attempts: 0 of 3 used Submit Answer 4698-bb2a-4c6cbc82a5b8#/question/ Question 8 of 8 -/30 View Policies Current Attempt in Progress A combined statement of income and retained earnings for Riverbed Ltd. for the year ended December 31, 2020, follows. (As a private company, Riverbed has elected to follow ASPE.) Also presented are three unrelated situations involving accounting changes and the classification of certain items as ordinary or unusual. Each situation is based on the combined statement of income and retained earnings of Riverbed Ltd. Riverbed Ltd. Combined Statement of Income and Retained Earnings For the Year Ended December 31, 2020 Sales revenue $ 5.780,000 Cost of goods sold 2,810.000 Gross profit 2.970,000 Selling, general, and administrative expenses 1.700.000 Income before income tax 1.270,000 Income tax expense 444,500 Income before unusual item 825,500 Loss from tornado (net of taxes) 536.575 Net income 288.925 Retained earnings, January 1 1,114,425 Retained earnings, December 31 $ 1,403,350 For each of the three unrelated situations, prepare a revised confined statement of income and retained earnings for Riverbed Ltd. The company has a 35% income tax rate. Situation 1. In late 2020, the company discontinued its apparel fabric division. The loss on the disposal of this discontinued division amounted to $640,000. This amount was included as part of selling general, and administrative expenses. Before its disposal, the division reported the following for 2020: sales revenue of $1.18 million cost of goods sold of $590,000; and selling general, and administrative expenses of $460,200. (Round answers to decimal places, es. 5.275.) Riverbed Ltd. Combined Statement of income and Retained Earnings For the Year Ended December 31, 2020 Sales Revenue 4600000 Cost of Goods Sold 2220000 Gross Proh/LO) 2380000 Sein General and Administrative Expenses 5998 Income before Income Tax and Discontinued Operations 1780200 Other Expenses and loses 698-bb2a-4c6cbc82a5b8#/question/ Jestion 8 of 8 -/30 e Textbook and Media Situation 2. At the end of 2020, the company's management decided that the estimated loss rate on uncollectible accounts receivable was too low. The loss rate used for the years 2019 and 2020 was 1.3% of total sales revenue, and owing to an increase in the write off of uncollectible accounts, the rate was raised to 4.0% of total sales revenue. The amount recorded in Bad Debt Expense under the heading Selling, General, and Administrative Expenses for 2020 was $75,140 and for 2019 it was $72,000. (Round answers to decimal places, eg. 5.275.) Riverbed Ltd. Combined Statement of Income and Retained Earnings $ $ e Textbook and Media Situation 3. On January 1, 2018, the company acquired machinery at a cost of $600,000. The company adopted the declining balance method of depreciation at a rate of 30% for this machinery, and had been recording depreciation over an estimated life of 10 years, with no residual value. At the beginning of 2020, a decision was made to adopt the straight-line method of depreciation for this machinery to better match expenses to their related revenues. Depreciation for 2020, based on the Straight-line method, was included in selling 38-bb2a-4c6cbc82a5b8#/question/7 estion 8 of 8 - / 30 $ e Textbook and Media Situation 3. On January 1, 2018, the company acquired machinery at a cost of $600,000. The company adopted the declining. balance method of depreciation at a rate of 30% for this machinery, and had been recording depreciation over an estimated life of 10 years, with no residual value. At the beginning of 2020. a decision was made to adopt the straight-line method of depreciation for this machinery to better match expenses to their related revenues. Depreciation for 2020, based on the straight-line method, was included in selling general, and administrative expenses. (Hint: a change in depreciation method is considered a change in estimate, not a change in accounting policy.) (Round answers to 0 decimal places, eg. 5,275.) Riverbed Ltd. Combined Statement of Income and Retained Earnings $ e Textbook and Media Sare for at Last saved 4 days ago Saved work will be auto submitted the Attempts: 0 of 3 used Submit