Computer Consulting Limited Was Started in Early 2016 and Continued

question 100

Essay

Computer Consulting Limited was started in early 2016 and continued to operate until early 2019,when it was wound up due to disputes between the two principal shareholders.When it started,the company used the following accounting policies:
1.Use straight-line depreciation for the firm's only asset,a computer which cost $1,100,000 and has an estimated useful life of four years.
2.Estimate warranty expense as 9% of sales.
3.Estimate bad debts expense as 5% of sales.
Derive net income for 2016 to 2018.For the year-end balance for 2019,assume accounts receivable,allowance for doubtful accounts,and the warranty accrual are $0,as the firm wound itself up during the year and all timing differences have been resolved.

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Definitions:

Authority Figure

An individual who holds power or control in a particular context, often able to influence others' actions or beliefs.

Obedience

The act of following the directives or commands of authorities or social norms, often studied in the context of how people can be influenced or controlled by others.

Milgram's Study

An influential experiment conducted by Stanley Milgram in the 1960s to investigate obedience to authority, demonstrating that people are willing to administer what they believe are painful electric shocks to another person when instructed by an authority figure.

Legitimate Power

A form of authority that is recognized and accepted by others due to the position or role held by an individual within an organization or society.