Please explain how to solve this problem.

Monty Corp. and Wildhorse Co. are competing businesses. Both began operations 6 years ago and are quite similar in most respects. The current balance sheet data for the two companies are shown below. Wildhorse Co. $47,897 328,440 0 Cash Accounts receivable Allowance for doubtful accounts Inventory Plant and equipment Accumulated depreciation-plant and equipment Total assets Current liabilities Long-term liabilities Total liabilities Stockholders' equity Total liabilities and stockholders' equity Monty Corp. $65,654 324,493 (13,350) 478,554 263,000 (115,000) $1,003,351 $445,029 79,690 524,719 478,632 $1,003,351 486,466 235,000 (173,396) $924,407 $424,950 81,500 506,450 417,957 $924,407 You have been engaged as a consultant to conduct a review of the two companies. Your goal is to determine which of them is in the stronger financial position. Your review of their financial statements quickly reveals that the two companies have not followed the same accounting practices. The differences and your conclusions regarding them are summarized below. dx 1. Monty Corp. has used the allowance method of accounting for bad debts. A review shows that the amount of its write-offs each year has been quite close to the allowances that have been provided. It therefore seems reasonable to have confidence in its current 6:32 AM . 5/26/2020 1. Monty Corp. has used the allowance method of accounting for bad debts. A review shows that the amount of its write-offs each year has been quite close to the allowances that have been provided. It therefore seems reasonable to have confidence in its current estimate of bad debts. Wildhorse Co. has used the direct write-off method for bad debts, and it has been somewhat slow to write off its uncollectible accounts. Based upon an aging analysis and review of its accounts receivable, it is estimated that $17,620 of its existing accounts will probably prove to be uncollectible. 2. Monty Corp. has determined the cost of its merchandise inventory on a LIFO basis. The result is that its inventory appears on the balance sheet at an amount that is below its current replacement cost. Based upon a detailed physical examination of its merchandise on hand, the current replacement cost of its inventory is estimated at $558,620. Wildhorse Co. has used the FIFO method of valuing its merchandise inventory. Its ending inventory appears on the balance sheet at an amount that quite closely approximates its current replacement cost. 3. Monty Corp. estimated a useful life of 12 years and a salvage value of $33,000 for its plant and equipment. It has been depreciating them on a straight-line basis. Wildhorse Co. has the same type of plant and equipment. However, it estimated a useful life of 10 years and a salvage value of $11,000. It has been depreciating its plant and equipment using the double-declining-balance method. Based upon engineering studies of these types of plant and equipment, you conclude that Wildhorse's estimates and method for calculating depreciation are the more appropriate. 4. Among its current liabilities, Monty has included the portions of long-term liabilities that become due within the next year. Wildhorse has not done so. You find that $14,500 of Wildhorse's $81,500 of long-term liabilities are due to be repaid in the current year. Revise the balance sheets presented above so that the data are comparable and reflect the current financial position for each of the two companies. Wildhorse Co. Monty Corp. ex 6:33 AM 5/26/20 Monty Corp. Wildhorse Co. Cash Accounts Receivable Allowance for Doubtful Accounts Inventory Plant and Equipment Accumulated Depreciation Total Assets $ $ Current Liabilities $ $ Long-term Liabilities Total Liabilities Stockholders' Equity $ $ Total Liabilities and Stockholders' Equity Assistance Used e Textbook and Media 6:33 AM 5/26/20