Bryant Corporation was incorporated on December 1, 2015, and began operations one week later. Before closing the books for the fiscal year ended November 30, 2016, Bryants controller prepared the following financial statements:

BRYANT CORPORATION

Balance Sheet

November 30, 2016

1	Assets
2	Current Assets:
3	Cash	$180,000.00
4	Accounts receivable	480,000.00
5	Less: Allowance for doubtful accounts	(59,000.00)
6	Inventories	430,000.00
7	Prepaid insurance	15,000.00
8	Total current assets	$1,046,000.00
9	Property, plant, and equipment	426,000.00
10	Less: Accumulated depreciation	(40,000.00)
11	R&D costs	120,000.00
12	Total Assets	$1,552,000.00
13	Liabilities and Shareholders Equity
14	Current Liabilities:
15	Accounts payable and accrued expenses	$592,000.00
16	Income taxes payable	168,000.00
17	Total current liabilities	$760,000.00
18	Shareholders Equity:
19	Common stock, $10 par value	$400,000.00
20	Retained earnings	392,000.00
21	Total shareholders equity	$792,000.00
22	Total Liabilities and Shareholders Equity	$1,552,000.00

BRYANT CORPORATION

Income Statement

For Year Ended November 30, 2016

1	Net sales	$2,950,000.00
2	Operating expenses:
3	Cost of goods sold	$1,670,000.00
4	Selling and administrative expense	650,000.00
5	Depreciation expense	40,000.00
6	Research and development expense	30,000.00
7	Total expenses	$2,390,000.00
8	Income before income taxes	$560,000.00
9	Income tax expense	168,000.00
10	Net income	$392,000.00

Bryant is in the process of negotiating a loan for expansion purposes, and the bank has requested audited financial statements. During the course of the audit, the following additional information was obtained:

a.	Included in selling and administrative expenses (specific account: software development expense) were $5,000 of costs incurred on software being developed for sale to others. The technological feasibility of the software has been established.
b.	Based on an aging of the accounts receivable as of November 30, 2016, it was estimated that $36,000 of the receivables will be uncollectible.
c.	Inventories at November 30, 2016, did not include work-in-process inventory costing $12,000 sent to an outside processor on November 26, 2016.
d.	A $3,000 insurance premium paid on November 30, 2016, on a policy expiring one year later was charged to insurance expense.
e.	On June 1, 2016, a production machine purchased for $24,000 was charged to factory repairs and maintenance. For financial and tax purposes, Bryant depreciates machines of this type using the straight-line method over a 5-year life with no salvage value.
f.	R&D costs of $150,000 were incurred in the development of a patent that Bryant expects to be granted during the fiscal year ending November 30, 2017. Bryant capitalized R&D costs and initiated a 5-year amortization of the $150,000 total cost during the fiscal year ended November 30, 2016.
g.	During December 2016, a competitor company filed suit against Bryant for patent infringement, claiming $200,000 in damages. Bryants legal counsel believes that an unfavorable outcome is probable. This lawsuit is deemed to be a subsequent event that should be recognized in the current fiscal year and a reasonable accrual based on an estimate of the courts award to the plaintiff is $50,000.
h.	The 30% effective tax rate was determined to be appropriate for calculating the provision for income taxes for the fiscal year ended November 30, 2016. Ignore computation of the deferred portion of income taxes.

Required:

1.	Prepare the necessary correcting entries.
2.	Prepare a corrected balance sheet for Bryant as of November 30, 2016, and a corrected income statement for the year ended November 30, 2016.

PAGE 1 GENERAL JOURNAL Score: 215/225 DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT Nov. 30 Software Development Costs 5,000.00 Software Development Expense 5,000.00 Nov. 30 Allowance for Doubtful Accounts 23,000.00 Bad Debt Expense 23,000.00 Nov. 30 Inventories 12,000.00 Cost of Goods Sold 12,000.00 Nov. 30 Prepaid Insurance 3,000.00 Insurance Expense 3,000.00 Nov. 30 Property, Plant, and Equipment 24,000.00 2,400.00 Depreciation Expense Repairs and Maintenance Expense 24,000.00 2,400.00 Accumulated Depreciation Research and Development Expense Nov. 30 120,000.00 Research and Development Costs 120,000.00 Nov. 30 Loss from Litigation 50,000.00 Estimated Liability from Lawsuit 50,000.00 Nov. 30 Income Tax Expense Income Taxes Payable BRYANT CORPORATION Score: 24/69 Balance Sheet November 30, 2016 Assets Current Assets: Cash Accounts receivable Less: Allowance for doubtful accounts 6 Inventories 442,000.00 18,000.00 Prepaid insurance Total current assets Property, plant, and equipment 450,000.00 10 Less: Accumulated depreciation 11 Software development costs 5,000.00 12 Total Assets Liabilities and Shareholders' Equity Current Liabilities: 15 Accounts payable and accrued expenses Estimated liability from lawsuit 50,000.00 17 Income taxes payable 18 Total current liabilities 19 Shareholders' Equity: 20 Common stock $400,000.00 21 Retained earnings 22 Total Shareholders' Equity 23 Total Liabilities and Shareholders' Equity BRYANT CORPORATION Score: 4/42 Income Statement For Year Ended November 30, 2016 Net sales $2,950,000.00 Operating expenses: 3 Cost of goods sold 4 Selling and administrative expense Depreciation expense Research and development expense Total operating expenses 7 8 Operating income Other items: 10 Loss from litigation 11 Income before income taxes 12 Income tax expense 13 Net income