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TEAM PROJECT Royal Furniture Inc. has operated successfully for the last six years in Pelham. They were owned by two cousins who decided, in January, 2018, to publicly sell stock in the company. You have been hired as the new accountant for the company at a $100K salary. They have provided you with a copy of their 2017 Income Statement (see below) and asked you to review and correct this before filing with the SEC. Royal Furniture Inc. Income Statement For the Twelve Months Ended 12/31/2017 Revenue $6,300,000 Expenses Cost of Goods Sold Salary Expense Rent Expense Utility Expense Bad Debt Expense Sales Returns Expense Sales Allowance Expense Sales Discount Expense $3,900,000 1,200,000 24,000 $6,000 $37,000 $58,000 $25,000 $2,000 $5,252,000 1,048,000 Total Expense Net Income before Taxes Income Taxes (25%) $786,000 Net Income Are there any changes you need to make, based on your knowledge of Chapter 5? Three more items on the balance sheet have you concerned. Any changes required? (1) The owners show Accounts Receivable of $200,000, but no allowance for uncollectible accounts. Their experience shows 6% usually can't be (2) Prepaid Insurance (8/1/17 to 7/31/18) was purchased for $18,000 on 300,000, 3 year 8% business loan was taken out on 10/1/17 from collected. August 1, 2017 Citibank. Interest payment is due semi-annually. (3) A $