Computer Consulting Limited Was Started in Early 2016 and Continued

question 12

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 these 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 the annual net cash flows 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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