Spade Corporation had net sales of $7,000,000 for the quarter ended March 31, 2008. Spade estimates that
3% of its net sales will not be collected. For the year ended December 31, 2008, Spade estimates net sales
will be $35,000,000. For the quarter ended March 31, 2008, what is Spade's bad debts expense?
B. $ 262,500
C. $ 210,000
D. $ 0
Derby Company pays its executives a bonus of 6 percent of income before deducting the bonus and income
taxes. For the quarter ended March 31, 2008, Derby had income before the bonus and income tax of
$12,000,000. For the year ended December 31, 2008, Derby estimates that its income before bonus and
income taxes will be $70,000,000. For the quarter ended March 31, 2008, what is the amount of the bonus
that Derby should deduct on its income statement?
C. $ 720,000
D. $ 180,000
In 2006 and 2007, each of Putney Company's four operating segments met one of the three quantitative
tests for segment reporting. In 2008, Segment B failed to qualify under the prescribed tests because of
abnormal financial conditions. The other three segments qualified for reporting. For 2008, Segment B:
A. should be excluded from segment disclosure but referred to in the management letter to shareholders.
B. should be distinctly separated from the other three segments and listed as a "nonqualifying" segment.