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Fitz-Chivalry Corporation reports the following information on its 2019 income statement. $ millions Gross sales 2019 2017 2018 $27,694 $30,738 $36,714 Allowance for sales returns 1,940 2,156 2,185 Net sales Required $25,754 $28,582 $34,529 Analysis of financial statements from prior years shows that the company consistently estimates the allowance for sales returns at about 7% of gross sales. What adjustment, if any, would we make to the 2019 income statement? Assume the company's combined federal and state tax rate is 24%. Hint: For adjustments to the income statement, we assume the normal 7% for the ratio of Allowance for sales returns to Gross sales for each year. Determine the 2019 adjusted allowance for sales return. (Round answer to nearest whole number.) $ millions Adjusted (total) allowance for sales returns $ 2019 0 Using the adjusted (total) allowance for sales returns computed above, determine the 2019 adjustments for the following income statement items. Notes: Round answers to nearest whole number. • Use negative signs with answers to indicate the adjustment decreases an account. Adjustments to Income Statement, $ millions 2019 Allowance for sales returns $ 0 Net sales $ 0 Income tax expense Net Income $ 0 $ 0

Fitz-Chivalry Corporation reports the following information on its 2019 income statement. $ millions Gross sales 2019 2017 2018 $27,694 $30,738 $36,714 Allowance for sales returns 1,940 2,156 2,185 Net sales Required $25,754 $28,582 $34,529 Analysis of financial statements from prior years shows that the company consistently estimates the allowance for sales returns at about 7% of gross sales. What adjustment, if any, would we make to the 2019 income statement? Assume the company's combined federal and state tax rate is 24%. Hint: For adjustments to the income statement, we assume the normal 7% for the ratio of Allowance for sales returns to Gross sales for each year. Determine the 2019 adjusted allowance for sales return. (Round answer to nearest whole number.) $ millions Adjusted (total) allowance for sales returns $ 2019 0 Using the adjusted (total) allowance for sales returns computed above, determine the 2019 adjustments for the following income statement items. Notes: Round answers to nearest whole number. • Use negative signs with answers to indicate the adjustment decreases an account. Adjustments to Income Statement, $ millions 2019 Allowance for sales returns $ 0 Net sales $ 0 Income tax expense Net Income $ 0 $ 0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sales Allowances Fitz-Chivalry Corporation reports the following information on its 2019 income statement. $ millions Gross sales 2017 2018 2019 $27,694 $30,738 $36,714 Allowance for sales returns Net sales 1,940 2,156 2,185 $25,754 $28,582 $34,529 Required Analysis of financial statements from prior years shows that the company consistently estimates the allowance for sales returns at about 7% of gross sales. What adjustment, if any, would we make to the 2019 income statement? Assume the company's combined federal and state tax rate is 24%. Hint: For adjustments to the income statement, we assume the normal 7% for the ratio of Allowance for sales returns to Gross sales for each year. Determine the 2019 adjusted allowance for sales return. (Round answer to nearest whole number.) $ millions Adjusted (total) allowance for sales returns $ 2019 0 Using the adjusted (total) allowance for sales returns computed above, determine the 2019 adjustments for the following income statement items. Notes: • Round answers to nearest whole number. • Use negative signs with answers to indicate the adjustment decreases an account. Adjustments to Income Statement, $ millions 2019 Allowance for sales returns $ 0 Net sales $ 0 Income tax expense Net Income $ 0 $ 0
Transcribed Image Text:Sales Allowances Fitz-Chivalry Corporation reports the following information on its 2019 income statement. $ millions Gross sales 2017 2018 2019 $27,694 $30,738 $36,714 Allowance for sales returns Net sales 1,940 2,156 2,185 $25,754 $28,582 $34,529 Required Analysis of financial statements from prior years shows that the company consistently estimates the allowance for sales returns at about 7% of gross sales. What adjustment, if any, would we make to the 2019 income statement? Assume the company's combined federal and state tax rate is 24%. Hint: For adjustments to the income statement, we assume the normal 7% for the ratio of Allowance for sales returns to Gross sales for each year. Determine the 2019 adjusted allowance for sales return. (Round answer to nearest whole number.) $ millions Adjusted (total) allowance for sales returns $ 2019 0 Using the adjusted (total) allowance for sales returns computed above, determine the 2019 adjustments for the following income statement items. Notes: • Round answers to nearest whole number. • Use negative signs with answers to indicate the adjustment decreases an account. Adjustments to Income Statement, $ millions 2019 Allowance for sales returns $ 0 Net sales $ 0 Income tax expense Net Income $ 0 $ 0
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