Number of Days Outstanding 0-30 days 31-60 days 61-90 days Over 90 days Estimated % Amount Uncollectible 1% $30,000 5% 12,000 10% 8,000 30% 2,000 J. Mustang has consulted you because of his dissatisfaction with the financial results for the year. Mr. Mustang is hoping you can recast the financial statements to show the business in a better in a better financial position. Required: 1. Determine the accounting policies used in the preparation of the financial statements with regard to Cost of Goods Sold and Depreciation Expense. Show all calculations. 2. Provide an alternative value for Cost of Goods Sold and Depreciation Expense. Explain how you arrived at these values. Show all calculations. 3. The bad debt expense reported on the Income Statement was calculated by using the percentage of sales approach. Using the aging schedule provided above, determine an alternate amount for bad debt expense. 4. Which of the accounting methods for inventory, capital assets and bad debt expense will result in a better financial position for the company? Explain by revising the financial statement balances and determine new values for net income, assets, liabilities and owner's equity. 5. Which of the accounting methods for inventory, capital assets and bad debt expense will result in a better cash flow for the company? Explain. CATEGORY Knowledge- Level I 0-5 marks Demonstrates Level 2 6-10 marks Demonstrates Level 3 11-15 marks Level 4 16-20 marks limited some Demonstrates considerable Demonstrates thorough TOTAL /20 Understanding of concepts and understanding of understanding of understanding of understanding of theories content content content content Case Study C: Using the Information in the Financial Statements