" Ernie Upshaw is the supervising manager of Sleep Tight Bedding. At the end of the year, the company's accounting manager provides Ernie with the following information, before any adjustment. Accounts receivable Estimated percent uncollectible Allowance for uncollectible accounts Operating income $ 506,000 98 $ 20,600 (debit) $ 326,000 In the previous year, Sleep Tight Bedding reported operating income (after adjustment) of $281,000. Ernie knows that it's important to report an upward trend in earnings. This is important not only for Ernie's compensation and employment, but also for the company's stock price. If investors see a decline in earnings, the stock price could drop significantly, and Ernie owns a large amount of the company's stock. This has caused Ernie many sleepless nights. Required: 1. Record the adjusting entry for uncollectible accounts using the accounting manager's estimate of 9% of accounts receivable. 2-a. After the adjusting entry is recorded in requirement 1, what is the revised amount of operating income? 2-b. Does operating income increase or decrease compared to the previous year? 3. Ernie instructs the accounting manager to record the adjusting entry for uncollectible accounts using 4% rather than 9% of accounts receivable. After this adjustment, does operating income increase or decrease compared to the previous year? 4. By how much would total assets and expenses be misstated using the 4% amount? O pints eBook Print References Record the adjusting entry for uncollectible accounts using the accounting manager's estimate of 9% of accounts receivable. (If no entr is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet < 1 Record the adjusting entry for uncollectible accounts. Note: Enter debits before credits. Transaction 1 Record entry General Journal Clear entry Debit Credit View general journal Complete this question by entering your answers in the tabs below. Req 1 Req 2a After the adjusting entry is recorded in requirement 1, what is the revised amount of operating income? Operating income Req 2b Req 3 < Req 1 Req 4 Req 2b > Complete this question by entering your answers in the tabs below. Req 1 Reg 2a Req 2 Req 3 Req 4 Does operating income increase or decrease compared to the previous year? Does operating income increase or decrease compared to the previous year? < Req 2a Req 3 > Complete this question by entering your answers in the tabs below. Req 1 Reg 2a Reg 2b Ernie instructs the accounting manager to record the adjusting entry for uncollectible accounts using 4% rather than 9% of accounts receivable. After this adjustment, does operating income increase or decrease compared to the previous year? Does operating income increase or decrease compared to the previous year? < Req 2b Req 3 Req 4 Req 4 > Complete this question by entering your answers in the tabs below. Req 1 Req Za Req 2b Req 3 By how much would total assets and expenses be misstated using the 4% amount? Total assets and expenses would be misstated by < Req 3 Req 4 Reg 4 >