Cullumber Corp. reported net incomes for the past three years as follows: 2023 $248,000 1 During the 2023 year-end audit, the following items come to your attention: Cullumber bought a truck on January 1, 2020 for $103,900 cash, with an $7,900 estimated residual value and a six-year life. The company debited an expense account for the entire cost of the asset. Cullumber uses straight-line depreciation for all trucks. 2. 2022 $232,000 3. 2021 $181,000 During 2023, Cullumber changed from straight-line depreciation for its cement plant to double declining balance. The following calculations present depreciation on both bases: Straight-line 2023 2022 2021 $18,480 $18,480 $18,480 23,716 30,800 36,960 Double-declining-balance The net income for 2023 was calculated using the double declining balance method. In reviewing its provision for uncollectible accounts during 2023, the corporation has determined that 1% is the appropriate amount of bad debt expense to be charged to operations. The company had used 1/2 of 1% as its rate in 2022 and 2021 when the expense had been $8,930 and $6,030, respectively. Cullumber recorded bad debt expense using the new rate for 2023. If they had used the old rate, they would have recorded $2,900 less bad debt expense on December 31.
Cullumber Corp. reported net incomes for the past three years as follows: 2023 $248,000 1 During the 2023 year-end audit, the following items come to your attention: Cullumber bought a truck on January 1, 2020 for $103,900 cash, with an $7,900 estimated residual value and a six-year life. The company debited an expense account for the entire cost of the asset. Cullumber uses straight-line depreciation for all trucks. 2. 2022 $232,000 3. 2021 $181,000 During 2023, Cullumber changed from straight-line depreciation for its cement plant to double declining balance. The following calculations present depreciation on both bases: Straight-line 2023 2022 2021 $18,480 $18,480 $18,480 23,716 30,800 36,960 Double-declining-balance The net income for 2023 was calculated using the double declining balance method. In reviewing its provision for uncollectible accounts during 2023, the corporation has determined that 1% is the appropriate amount of bad debt expense to be charged to operations. The company had used 1/2 of 1% as its rate in 2022 and 2021 when the expense had been $8,930 and $6,030, respectively. Cullumber recorded bad debt expense using the new rate for 2023. If they had used the old rate, they would have recorded $2,900 less bad debt expense on December 31.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Do not give image format
Transcribed Image Text:Cullumber Corp. reported net incomes for the past three years as follows:
2021
$248,000 $232,000 $181,000
2023
During the 2023 year-end audit, the following items come to your attention:
1. Cullumber bought a truck on January 1, 2020 for $103,900 cash, with an $7,900 estimated residual value and a six-year
life. The company debited an expense account for the entire cost of the asset. Cullumber uses straight-line depreciation
for all trucks.
2
2022
3.
During 2023, Cullumber changed from straight-line depreciation for its cement plant to double declining balance. The
following calculations present depreciation on both bases:
Straight-line
Double-declining balance
2023
$18,480
23,716 30,800
2022
2021
$18,480 $18,480
36,960
The net income for 2023 was calculated using the double declining balance method.
In reviewing its provision for uncollectible accounts during 2023, the corporation has determined that 1% is the
appropriate amount of bad debt expense to be charged to operations. The company had used 1/2 of 1% as its rate in 2022
and 2021 when the expense had been $8,930 and $6,030, respectively. Cullumber recorded bad debt expense using the
new rate for 2023. If they had used the old rate, they would have recorded $2,900 less bad debt expense on December 31,
2023.
Transcribed Image Text:(b)
Present comparative income statement data for the years 2021 to 2023, starting with income before the cumulative effect of
any accounting changes. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or
parentheses e.g. (45).)
Dividends
Depreciation of Truck
Expenses
Gross Profit
Income before Cumulative Effect of Error Correction
Income from Operations
Net Income /(Loss)
Net Sales
Other Revenues and Gains
Sales Revenues
Show Transcribed Text
$
S
$
2023
$
Comparative Income statement
Comparative Income statement
2023
Present comparative income statement data for the years 2021 to 2023, starting with income before the cumulative effect of
any accounting changes. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or
parentheses e.g. (45).)
$
2022
2022
$
$
2021
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