A combined statement of income and retained earnings for Bridgeport Ltd. for the year ended December 31, 2020, follows. (As a private company, Bridgeport 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 Bridgeport Ltd. Bridgeport Ltd. Combined Statement of Income and Retained Earnings For the Year Ended December 31, 2020 Sales revenue $ 5,520,000 Cost of goods sold 2,840,000 2,680,000 1,890,000 Gross profit Selling, general, and administrative expenses Income before income tax Income tax expense 790,000 276,500 Income before unusual item 513,500 Loss from tornado (net of taxes) 333,775 Net income 179,725 693,225 Retained earnings, January 1 Retained earnings, December 31 $ 872,950 For each of the three unrelated situations, prepare a revised combined statement of income and retained earnings for Bridgeport 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 $ 600,000. 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 $ 1.06 million; cost of goods sold of $530,000; and selling, general, and administrative expenses of $ 413,400. (Round answers to decimal places, eg. 5,275.) Bridgeport Ltd. Combined Statement of Income and Retained Earnings For the Year Ended December 31, 2020 Sales Revenue Cost of Goods Sold Gross Profit/(Loss) Income from Operations Other Expenses and Losses > Loss from Tornado Income before Income Tax and Discontinued Operations Income Tax Expense > Income before Discontinued Operations > Discontinued Operations > Gain from Disposal Of Apparel Division (Net Of Tax) > $ Loss from Disposal Of Apparel Division (Net Of Tax) > Net Income /(Loss) $ Retained Earnings, January 1 Retained Earnings. December 31 $ 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 2.0% of total sales revenue. The amount recorded in Bad Debt Expense under the heading Selling, General, and Administrative Expenses for 2020 was $ 71,760 and for 2019 it was $ 77,000. (Round answers to decimal places, e.g. 5,275.) Bridgeport Ltd. Combined Statement of Income and retained Earnings For the Year Ended December 31, 2020 Sales Revenue $ Cost of Goods Sold Gross Profit/(Loss) Selling General and Administrative Expenses Income from Operations Other Expenses and Losses > Loss from Tornado Income before Income Tax Retained Earnings, December 31 $ Situation 3. On January 1, 2018, the company acquired machinery at a cost of $ 560,000. 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 decimal places, eg. 5,275.) Bridgeport Ltd. Combined Statement of Income and retained Earnings For the Year Ended December 31, 2020 Sales Revenue $ Cost of Goods Sold Gross Profit/(Loss) Selling General and Administrative Expenses Income from Operations Other Expenses and Losses Loss from Tornado > Income before Income Tax Income Tax Expense Net Income /(Loss) Retained Earnings, January 1 Retained Earnings, December 31 $ A combined statement of income and retained earnings for Bridgeport Ltd. for the year ended December 31, 2020, follows. (As a private company, Bridgeport 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 Bridgeport Ltd. Bridgeport Ltd. Combined Statement of Income and Retained Earnings For the Year Ended December 31, 2020 Sales revenue $ 5,520,000 Cost of goods sold 2,840,000 2,680,000 1,890,000 Gross profit Selling, general, and administrative expenses Income before income tax Income tax expense 790,000 276,500 Income before unusual item 513,500 Loss from tornado (net of taxes) 333,775 Net income 179,725 693,225 Retained earnings, January 1 Retained earnings, December 31 $ 872,950 For each of the three unrelated situations, prepare a revised combined statement of income and retained earnings for Bridgeport 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 $ 600,000. 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 $ 1.06 million; cost of goods sold of $530,000; and selling, general, and administrative expenses of $ 413,400. (Round answers to decimal places, eg. 5,275.) Bridgeport Ltd. Combined Statement of Income and Retained Earnings For the Year Ended December 31, 2020 Sales Revenue Cost of Goods Sold Gross Profit/(Loss) Income from Operations Other Expenses and Losses > Loss from Tornado Income before Income Tax and Discontinued Operations Income Tax Expense > Income before Discontinued Operations > Discontinued Operations > Gain from Disposal Of Apparel Division (Net Of Tax) > $ Loss from Disposal Of Apparel Division (Net Of Tax) > Net Income /(Loss) $ Retained Earnings, January 1 Retained Earnings. December 31 $ 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 2.0% of total sales revenue. The amount recorded in Bad Debt Expense under the heading Selling, General, and Administrative Expenses for 2020 was $ 71,760 and for 2019 it was $ 77,000. (Round answers to decimal places, e.g. 5,275.) Bridgeport Ltd. Combined Statement of Income and retained Earnings For the Year Ended December 31, 2020 Sales Revenue $ Cost of Goods Sold Gross Profit/(Loss) Selling General and Administrative Expenses Income from Operations Other Expenses and Losses > Loss from Tornado Income before Income Tax Retained Earnings, December 31 $ Situation 3. On January 1, 2018, the company acquired machinery at a cost of $ 560,000. 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 decimal places, eg. 5,275.) Bridgeport Ltd. Combined Statement of Income and retained Earnings For the Year Ended December 31, 2020 Sales Revenue $ Cost of Goods Sold Gross Profit/(Loss) Selling General and Administrative Expenses Income from Operations Other Expenses and Losses Loss from Tornado > Income before Income Tax Income Tax Expense Net Income /(Loss) Retained Earnings, January 1 Retained Earnings, December 31 $