In 2019, Galaxie Company changed the way it accounted for two estimates In early 2019, because it discontinued relationships with some of its customers whose accounts receivable it had to write off, Galaxie rightly decided that it could reduce its allowance for bad debts to 2% of the ending accounts receivable balance, beginning with the 2019 year-end journal entry to record bad debt expense. Through 2018, Galaxie determined bad debt expense using 6% of ending accounts receivable. Galaxie's ending balance in accounts receivable was $300,000 on 12/31/18, and it was $200,000 on 12/31/19. Its ending balance in the allowance for bad debts was a credit balance of $18,000 on 12/31/18 and, on 12/31/19, before it made the 2019 adjustment for bad debt expense, it is a credit balance of S2,650. Galaxie purchased a truck for $60,000 on 1/1/17 and depreciated it using the straight line method (full year of depreciation in 2017). On 1/1/17, based on how much they expected to use the truck, they estimated that the truck had a useful life of five (5) years. On 1/1/19, because they used the truck less than expected, they decided in good faith that its total useful life is seven years. Required: a. What is bad debt expense for 2019? b. What is depreciation expense for the truck in 2019 if Galaxie starts using the new estimate as of 1/1/19? The truck correctly has never had a salvage value. Galaxie is not sure if either of these changes is an error. As their accountant, you told them you'd tell them whether either was an error by telling them whether or not net income for 2018 was misstated. What, if anything, is the misstatement of net income in 2018? Provide a dollar amount and, if non-zero, indicate whether net income is overstated or understated. Overstated Understated In 2019, Galaxie Company changed the way it accounted for two estimates In early 2019, because it discontinued relationships with some of its customers whose accounts receivable it had to write off, Galaxie rightly decided that it could reduce its allowance for bad debts to 2% of the ending accounts receivable balance, beginning with the 2019 year-end journal entry to record bad debt expense. Through 2018, Galaxie determined bad debt expense using 6% of ending accounts receivable. Galaxie's ending balance in accounts receivable was $300,000 on 12/31/18, and it was $200,000 on 12/31/19. Its ending balance in the allowance for bad debts was a credit balance of $18,000 on 12/31/18 and, on 12/31/19, before it made the 2019 adjustment for bad debt expense, it is a credit balance of S2,650. Galaxie purchased a truck for $60,000 on 1/1/17 and depreciated it using the straight line method (full year of depreciation in 2017). On 1/1/17, based on how much they expected to use the truck, they estimated that the truck had a useful life of five (5) years. On 1/1/19, because they used the truck less than expected, they decided in good faith that its total useful life is seven years. Required: a. What is bad debt expense for 2019? b. What is depreciation expense for the truck in 2019 if Galaxie starts using the new estimate as of 1/1/19? The truck correctly has never had a salvage value. Galaxie is not sure if either of these changes is an error. As their accountant, you told them you'd tell them whether either was an error by telling them whether or not net income for 2018 was misstated. What, if anything, is the misstatement of net income in 2018? Provide a dollar amount and, if non-zero, indicate whether net income is overstated or understated. Overstated Understated