b. Brady Trueman, the owner of Trueman Company, earned his MBA from the GSM at UC Davis, and remembered that an important step before preparing financial statements is to update the using accrual, d account balances and recent contracts, Brady decides t accounts eferral, cost allocation, and valuation adjustments. After reviewing the unadjusted he following adjustments are needed 1, Brady estimates that 3% of the ending account will not be collected, i.e., Brady is applying the aging of accounts receiva estimating bad debt expense. Please round to the nearest dollar. 2. One type of uniform in ending inventory will not be sold at its normal profit margin because of falling demand. Brady estimates an inventory impairment of $500 3. $400 of supplies remain on hand at December 31 4. Equipment is depreciated over a 5 year life with no salvage. All pieces of equipment were put in operation before 1/1/17 (no partial year depreciation needs to be recorded). 5. The long term notes payable is due on 12/31/2021, and has a stated interest rate of 8% annually. The interest will be paid on Jan. 1, 2018. 6. Brady forgot that a customer had returned $3,000 worth of aprons. The aprons had cost Trueman Company $2,000. The aprons were in the supplies closet but were not included in the supplies account nor in the inventory account. The customer has not yet received a refund but expects one by Jan. 5, 2018. s receivable balance Prepare an income statement for the year ended December 31, 2017 and balance sheet as of December 31, 2017 for Trueman Company (60 points). b. Brady Trueman, the owner of Trueman Company, earned his MBA from the GSM at UC Davis, and remembered that an important step before preparing financial statements is to update the using accrual, d account balances and recent contracts, Brady decides t accounts eferral, cost allocation, and valuation adjustments. After reviewing the unadjusted he following adjustments are needed 1, Brady estimates that 3% of the ending account will not be collected, i.e., Brady is applying the aging of accounts receiva estimating bad debt expense. Please round to the nearest dollar. 2. One type of uniform in ending inventory will not be sold at its normal profit margin because of falling demand. Brady estimates an inventory impairment of $500 3. $400 of supplies remain on hand at December 31 4. Equipment is depreciated over a 5 year life with no salvage. All pieces of equipment were put in operation before 1/1/17 (no partial year depreciation needs to be recorded). 5. The long term notes payable is due on 12/31/2021, and has a stated interest rate of 8% annually. The interest will be paid on Jan. 1, 2018. 6. Brady forgot that a customer had returned $3,000 worth of aprons. The aprons had cost Trueman Company $2,000. The aprons were in the supplies closet but were not included in the supplies account nor in the inventory account. The customer has not yet received a refund but expects one by Jan. 5, 2018. s receivable balance Prepare an income statement for the year ended December 31, 2017 and balance sheet as of December 31, 2017 for Trueman Company (60 points)
