Computer needs limited

0 Accounting policy set 1 Computer Needs Limited was started in early 2021 and continued to operate until early 2024, when it was wound up due to disputes between the two principal owners. When it (Click the icon to view accounting policy set 1.) (Click the icon to view accounting policy set 2.) a. Actual events, cash flows, and transactions are as follows. (Click the icon to view the data.) Use straight-line depreciation method on the firm's only asset. The computer cost $1,250,000 and has an estimated useful life of four years. b. Estimate warranty expense as 9% of sales. C. Estimate bad debts expense as 6% of sales. Required Requirement a. Derive net income for 2021 to 2024 using the first set of accounting policies. For the year-end balance for 2024, assume accounts receivable, allowance for doubt differences have been resolved. (Enter a "0" for any zero balances.) le year and all timing X - Accounting policy set 2 2 2021 2022 2023 2024 Sales 3,500,000 3,200,000 690,000 Operating expenses a. 3,750,000 (2,531,250) (337500) (2,450,000) (315000) (483,000) (2.240,000) (288000) Warranty expense 0 Use 50% declining balance method for depreciation. b. Estimate warranty expense as 10% of sales. The year-end allowance for doubtful accounts should be 40% of gross accounts receivable. C. Bad debt expense (192,000) (225000) 0 (210000) (560000) Depreciation expense (560000) (560000) (560000) 0 0 Gain on disposal 375,000 Print Done (35000) (80,000) Net income ) 962501 (81,500) Data Table - Requirement b. Derive net income for 2021 to 2024 using the second set of accounting policies. For the year-end balance for 2024, assume accounts receiva differences have been resolved. (Use a minus sign or parentheses for a loss. Enter a "0" for any zero balances.) 2021 2022 2023 2024 2021 2022 2023 2024 Sales Sales (all on account) ) $ 3,500,000 $ 3,200,000 $ 3,750,000 $ 690,000 Operating expenses Warranties paid 280,000 256,000 384,375 248,400 Warranty expense Proceeds on disposal of computer 375,000 Bad debt expense Accounts receivable collected in year 3,045,000 2,560,000 3,562,500 1,324,000 or recovery 105,000 96,000 187,500 260,000 Accounts receivable written off in year All other expenses (paid in cash in the year incurred) Depreciation expense 2,450,000 2,240,000 2,531,250 483,000 Gain on disposal Net income (loss) Print Done Requirement c. Derive the annual net cash flows for 2021 to 2024. Computer Needs Limited was started in early 2021 and continued to operate until early 2024, when it was wound up due to disputes between the two principal owners. When it started, the company considered two sets of accounting policies. Click the icon to view accounting policy set 1.) (Click the icon to view accounting policy set 2.) Actual events, cash flows, and transactions are as follows. (Click the icon to view the data.) Required Net income (loss) ( Requirement c. Derive the annual net cash flows for 2021 to 2024. Begin by calculating the annual net cash flow for 2021 and then for 2022, 2023, and 2024. (Use a minus sign or parentheses for a cash outflow. Enter a "0" for any zero balances.) 2021 2022 2023 2024 Collections 2,560,000 3,562,500 1,324,000 Cash operating expenses (2,240,000) (2,531,250) (483,000) 3,045,000 (2,450,000) (280,000) (1250000)| Warranty expense paid (256,000) (384,375) (248,400) Purchase of capital asset (1810000) (2930000) (2370000) ol 0 (375,000) Proceeds on disposal of capital asset Net cash flow (935,000) (1,746,000) (1.723,125) (2,712,400) Requirement d. What is the sum of the net income for the four years for the two sets of accounting policies? What is the sum of the net cash flows for the four years? What does this tell us about net income and accrual accounting? Compare the 4-year totals for cash flow and income. Comment on the similarities and differences. Sum of the net income over four years using accounting policy set 1: Sum of the net income over four years using accounting policy set 2: Sum of the net cash flows over four years: What does this tell us about net income and accrual accounting? These sums show that, from a company's beginning to its end (cradle to grave), the sum of net income and cash flows Requirement e. Why were the net incomes different between the two sets of accounting policies? The differences in net incomes for the two scenarios is the result of using different methods of accruing Requirement f. What caused the net income in 2024 to be so high for the second set of accounting policies? The net income for 2024 is significantly higher using accounting policy set 2 than set 1. This is due to the fact that the first set of accounting policies recorded This means in later years and when the firm was wound V must be reversed Enter any number in the edit fields and then continue to the next question. ? 0 Accounting policy set 1 Computer Needs Limited was started in early 2021 and continued to operate until early 2024, when it was wound up due to disputes between the two principal owners. When it (Click the icon to view accounting policy set 1.) (Click the icon to view accounting policy set 2.) a. Actual events, cash flows, and transactions are as follows. (Click the icon to view the data.) Use straight-line depreciation method on the firm's only asset. The computer cost $1,250,000 and has an estimated useful life of four years. b. Estimate warranty expense as 9% of sales. C. Estimate bad debts expense as 6% of sales. Required Requirement a. Derive net income for 2021 to 2024 using the first set of accounting policies. For the year-end balance for 2024, assume accounts receivable, allowance for doubt differences have been resolved. (Enter a "0" for any zero balances.) le year and all timing X - Accounting policy set 2 2 2021 2022 2023 2024 Sales 3,500,000 3,200,000 690,000 Operating expenses a. 3,750,000 (2,531,250) (337500) (2,450,000) (315000) (483,000) (2.240,000) (288000) Warranty expense 0 Use 50% declining balance method for depreciation. b. Estimate warranty expense as 10% of sales. The year-end allowance for doubtful accounts should be 40% of gross accounts receivable. C. Bad debt expense (192,000) (225000) 0 (210000) (560000) Depreciation expense (560000) (560000) (560000) 0 0 Gain on disposal 375,000 Print Done (35000) (80,000) Net income ) 962501 (81,500) Data Table - Requirement b. Derive net income for 2021 to 2024 using the second set of accounting policies. For the year-end balance for 2024, assume accounts receiva differences have been resolved. (Use a minus sign or parentheses for a loss. Enter a "0" for any zero balances.) 2021 2022 2023 2024 2021 2022 2023 2024 Sales Sales (all on account) ) $ 3,500,000 $ 3,200,000 $ 3,750,000 $ 690,000 Operating expenses Warranties paid 280,000 256,000 384,375 248,400 Warranty expense Proceeds on disposal of computer 375,000 Bad debt expense Accounts receivable collected in year 3,045,000 2,560,000 3,562,500 1,324,000 or recovery 105,000 96,000 187,500 260,000 Accounts receivable written off in year All other expenses (paid in cash in the year incurred) Depreciation expense 2,450,000 2,240,000 2,531,250 483,000 Gain on disposal Net income (loss) Print Done Requirement c. Derive the annual net cash flows for 2021 to 2024. Computer Needs Limited was started in early 2021 and continued to operate until early 2024, when it was wound up due to disputes between the two principal owners. When it started, the company considered two sets of accounting policies. Click the icon to view accounting policy set 1.) (Click the icon to view accounting policy set 2.) Actual events, cash flows, and transactions are as follows. (Click the icon to view the data.) Required Net income (loss) ( Requirement c. Derive the annual net cash flows for 2021 to 2024. Begin by calculating the annual net cash flow for 2021 and then for 2022, 2023, and 2024. (Use a minus sign or parentheses for a cash outflow. Enter a "0" for any zero balances.) 2021 2022 2023 2024 Collections 2,560,000 3,562,500 1,324,000 Cash operating expenses (2,240,000) (2,531,250) (483,000) 3,045,000 (2,450,000) (280,000) (1250000)| Warranty expense paid (256,000) (384,375) (248,400) Purchase of capital asset (1810000) (2930000) (2370000) ol 0 (375,000) Proceeds on disposal of capital asset Net cash flow (935,000) (1,746,000) (1.723,125) (2,712,400) Requirement d. What is the sum of the net income for the four years for the two sets of accounting policies? What is the sum of the net cash flows for the four years? What does this tell us about net income and accrual accounting? Compare the 4-year totals for cash flow and income. Comment on the similarities and differences. Sum of the net income over four years using accounting policy set 1: Sum of the net income over four years using accounting policy set 2: Sum of the net cash flows over four years: What does this tell us about net income and accrual accounting? These sums show that, from a company's beginning to its end (cradle to grave), the sum of net income and cash flows Requirement e. Why were the net incomes different between the two sets of accounting policies? The differences in net incomes for the two scenarios is the result of using different methods of accruing Requirement f. What caused the net income in 2024 to be so high for the second set of accounting policies? The net income for 2024 is significantly higher using accounting policy set 2 than set 1. This is due to the fact that the first set of accounting policies recorded This means in later years and when the firm was wound V must be reversed Enter any number in the edit fields and then continue to the next