Sales Allowances Fitz-Chivalry Corporation reports the following information on its 2019 income statement. $ millions Gross sales Allowance for sales returns Net sales 2017 2018 2019 $27,694 $30,738 $36,714 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 2,570 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 $ 385 Net sales $ (385) Income tax expense Net Income $ (92) $ (293)
Sales Allowances Fitz-Chivalry Corporation reports the following information on its 2019 income statement. $ millions Gross sales Allowance for sales returns Net sales 2017 2018 2019 $27,694 $30,738 $36,714 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 2,570 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 $ 385 Net sales $ (385) Income tax expense Net Income $ (92) $ (293)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 8E: Cost of Goods Sold, Income Statement. and Statement of Comprehensive Income Gaskin Company derives...
Related questions
Question
5.
Please answer all the tables in their entirely
Transcribed Image Text:Sales Allowances
Fitz-Chivalry Corporation reports the following information on its 2019 income statement.
$ millions
Gross sales
Allowance for sales returns
Net sales
2017 2018 2019
$27,694 $30,738 $36,714
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
2,570
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
$
385
Net sales
$
(385)
Income tax expense
Net Income
$
(92)
$
(293)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 1 steps
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College