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ABC Online Retail sells electronics. Financial transactions for 2023 are summarized below: Transactions (in $ millions) Amount Cash Sales 90.0 Credit Sales 40.0 Cash Payments

ABC Online Retail sells electronics. Financial transactions for 2023 are summarized below:

Transactions (in $ millions)

Amount

Cash Sales

90.0

Credit Sales

40.0

Cash Payments

70.0

Accounts Receivable

30.0

Inventory Purchases

50.0

Estimated Product Returns

7.0

Requirements:

  • Prepare ABC Online Retail's income statement for 2023 using the modified cash basis.
  • Calculate net income considering the conservatism principle.
  • Discuss the impact of estimated product returns on financial statements.
  • Analyze the treatment of accounts receivable and inventory purchases under the conservatism principle.

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