At the end of the year, the Chief Financial Officer (CFO) of Major Industries has been asked by the company's president to prepare financial statements. Initial calculations show the company has: Total revenues for the year of $750,000 Total expenses for the year of $400,000 The CFO then determines that six additional adjustments to expenses are needed based on estimated future outcomes. For each of these adjustments, the CFO's estimated ranges of possible outcomes (high and low), as well as the most likely outcome (middle), are shown in the graphs below. Aggressive Versus Conservative Accounting Practices $60,000 $55,000 $50,000 $47,000 $48,000 $45,000 $40,000 $42.000 + $36,000 $38,000 $33,000 + $34,000 $30,000 $28,000 $28,000 $24,000 $25,000 $20,000 $19,000 $15,000 $15,000 1 $10,000 $0 $0 SO 1. Estimated future uncollectible accounts 2 3. Estimated future Estimated future selling price of residual value of ending Inventory equipment 5. Estimated future Estimated future Estimated future cash flows of warranty costs lawsuit costs equipment Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Requr What is the reported amount of net income prior to any of the five adjustments? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required For estimate 1, an aggressive CFO would report estimated future uncollectible accounts of prete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 For estimate 2, the company's recorded cost of ending inventory is $25,000. A conservative CFO would estimate future selling price of ending inventory to be and make an adjustment to inventory and cost of goods sold for Required 2 Remed Required 6 Required Required 5 Required 4 Required 3 Required 1 Required 2 For estimate 3, the company purchased equipment at the beginning of the year for $100,000 with a five year useful life. For purposes of calculating straight-line depreciation in the first year, an aggressive CFO would estimate the residual value to be Penon depreciation of Required 3 > red 4 Required 5 Required 6 Required 7 Required 8 For estimate 4, the company has equipment with a book value of $26,000 and fair value of $22,000. A CFO using the most likely estimate of future cash flows would estimate future cash flows to be and report an impairment loss of Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required Required 5 Required 6 Required Required For estimate 5, a conservative CFO would report estimated future warranty costs of For estimate 6, the company faces a lawsuit Legal counsel advises the CFO that there is any chance the company will lose $34000, a 10% chance the company will lose $48,000, and 20% chance the company willows. An aggressive CFO would report a contingent loss from the lawsuit of Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 If the CFO is aggressive on all six estimates, which of the following is true
