Document 2 - income statement. A 5._The company sold one of...

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For each of the items listed below, indicate how it should be treated in the financial statements. Use the following letter code for your selections: PRINT YOUR ANSWER IN CAPITAL LETTERS, SELECT ONLY ONE ANSWER a. Ordinary or unusual (but not extraordinary) item on the income statement b. Discontinued operations c. Extraordinary item on the income statement d. Prior period adjustment A 1._The bad debt rate was increased from 1% to 2%, thus increasing bad debt expense. A 2._Obsolete inventory was written off. This was the first loss of this type in the company's history. C 3._An uninsured casualty loss was incurred by the company. This was the first loss of this type in the company's 50-year history. D 4._Recognition of income earned last year which was inadvertently omitted from last year's
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Unformatted text preview: income statement. A 5._The company sold one of its warehouses at a loss. A 6._Settlement of litigation with federal government related to income taxes of three years ago. The company is continually involved in various adjustments with the federal government related to its taxes. C 7._A loss incurred from expropriation (the company owned resources in South America which were taken over by a dictator unsympathetic to American business). D 8._The company neglected to record its depreciation in the previous year. A 9._Discontinuance of all production in the United States. The manufacturing operations were relocated in Mexico. A 10._Loss on sale of investments. The company last sold some of its investments two years ago....
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This note was uploaded on 04/04/2010 for the course AC AC 312 taught by Professor Chun,m during the Spring '10 term at Southwestern.

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