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 T $55,000 $50,000 T $47,000 $45,000 I $48,000 $42,000 $40,000 T $38,000 $36,000 $33,000 $34,000 $30,000 + $28,000 +$28,000 $24,000 T $25,000 $20,000 $19,000 $15,000 + $15,000 $10,000 $0 $0 $0 Estimated future uncollectible accounts Estimated future selling price of ending inventory Estimated future residual value of equipment Estimated future Estimated future Estimated future cash flows of warranty costs lawsuit costs equipment X Answer is complete but not entirely correct. 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 8 What is the reported amount of net income prior to any of the five adjustments? $ 350,000 Answer is complete but not entirely correct. 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 8 For estimate 1, an aggressive CFO would report estimated future uncollectible accounts $47,000 of & Answer is complete but not entirely correct. 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 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 $15,000 and make an adjustment to inventory and cost of goods sold $10,000 for & Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 L 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 $28,000 and report an impairment loss of $4,000 & Answer is complete but not entirely correct. 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 8 For estimate 5, a conservative CFO would report estimated future warranty costs of $55,000 & Answer is complete but not entirely correct. 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 8 For estimate 6, the company faces a lawsuit. Legal counsel advises the CFO that there is an 70% chance the company will lose $34,000, a 10% chance the company will lose $48,000, and 20% chance the company will lose $0. An aggressive CFO would report a contingent loss from the lawsuit of $48,000 X & Answer is complete but not entirely correct. 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 8 If the CFO is aggressive on all six estimates, which of the following is true? reported net income is lower