ATC 3-4 Written Assignment, Critical Thinking Effect of sales returns on financial statements Bell Farm and Garden Equipment reported the following information for 2018: Net Sales of Equipment $2,450,567 Other Income 6,786 Cost of Goods Sold 1,425,990 Selling, General, and Administrative Expense 325,965 Net Operating Income $ 705,398 Selected information from the balance sheet as of December 31, 2018, follows: Cash and Markclable Securities $ 113,545 Inventory 248,600 Accounts Receivable 82,462 Property, Plant, and Equipment-Net 335,890 Other Assets 5,410 Total Assets $785.907 Assume that a major customer returned a large order to Bell on December 31, 2018. The amount of the sale had been $146.800 with a cost of sales of $94.623. The return was recorded in the books on January 1, 2019. The company president does not want to correct the books. He argues that it makes no difference as to whether the return is recorded in 2018 or 2019. Either way, the return has been duly recognized Required al. Assume that you are the CFO for Bell Farm and Garden Equipment Co. Write a memo to the president explaining how omitting the entry on December 31, 2018, could cause the financial statements to be misleading to investors and creditors. Explain how omitting the return from the customer would affect net income and the balance sheet. b. Why might the president want to record the return on January 1, 2019, instead of December 31, 2018? ATC 3-4 Written Assignment, Critical Thinking Effect of sales returns on financial statements Bell Farm and Garden Equipment reported the following information for 2018: Net Sales of Equipment $2,450,567 Other Income 6,786 Cost of Goods Sold 1,425,990 Selling, General, and Administrative Expense 325,965 Net Operating Income $ 705,398 Selected information from the balance sheet as of December 31, 2018, follows: Cash and Markclable Securities $ 113,545 Inventory 248,600 Accounts Receivable 82,462 Property, Plant, and Equipment-Net 335,890 Other Assets 5,410 Total Assets $785.907 Assume that a major customer returned a large order to Bell on December 31, 2018. The amount of the sale had been $146.800 with a cost of sales of $94.623. The return was recorded in the books on January 1, 2019. The company president does not want to correct the books. He argues that it makes no difference as to whether the return is recorded in 2018 or 2019. Either way, the return has been duly recognized Required al. Assume that you are the CFO for Bell Farm and Garden Equipment Co. Write a memo to the president explaining how omitting the entry on December 31, 2018, could cause the financial statements to be misleading to investors and creditors. Explain how omitting the return from the customer would affect net income and the balance sheet. b. Why might the president want to record the return on January 1, 2019, instead of December 31, 2018