Computer Consulting Limited Was Started in Early 2010 and Continued

question 46

Essay

Computer Consulting Limited was started in early 2010 and continued to operate until early 2013, 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 2010 to 2012. For the year-end balance for 2013, 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:

State Intervention

The involvement of a government in regulating or participating in economic, social, or other public sectors, often aimed at achieving policy objectives or correcting market failures.

New Nationalism

A political philosophy introduced by Theodore Roosevelt in 1910 advocating for government intervention to enhance public welfare and regulate big businesses.

Theodore Roosevelt

The 26th president of the United States, known for his progressive policies, leadership of the Progressive Movement, and conservation efforts.

Economic Power

The capacity of a country, business, or individual to influence the economy or economic conditions through various means, including wealth, production, or consumption.