Computer Consulting Limited Was Started in Early 2019 and Continued

question 59

Essay

Computer Consulting Limited was started in early 2019 and continued to operate until early 2022, 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 2019 to 2021. For the year-end balance for 2022, 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.
$\begin{array} { | l | r | r | r | r | } \hline & 2019 & 2020 & 2021 & 2022 \\\hline \text { Sales (all on account } & 3,400,000 & 3,600,000 & 4,100,000 & 410,000 \\\hline \text { Warranties paid } & 272,000 & 288,000 & 420,250 & 147,600 \\\hline \begin{array} { l } \text { Proceeds on disposal of } \\\text { computer }\end{array} & 0 & 0 & 0 & 410,000 \\\hline \begin{array} { l } \text { Accounts receivable collected in } \\\text { he year }\end{array} & 2,958,000 & 2,880,000 & 3,895,000 & 1,126,000 \\\hline \begin{array} { l } \text { Accounts receivable written off } \\\text { in the year }\end{array} & 102,000 & 108,000 & 205,000 & 236,000 \\\hline \begin{array} { l } \text { All other expenses (paid in cash } \\\text { in the year incurred) }\end{array} & 2,380,000 & 2,520,000 & 2,767,500 & 287,000 \\\hline\end{array}$

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Definitions:

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An approach that involves objective analysis and evaluation of an issue to form a judgment.

Caring Attitude

An approach that embodies compassion, concern, and consideration for others, showing support and understanding in a healthcare context.

Client's Crying

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Critical Thinking

The objective analysis and evaluation of an issue in order to form a judgment, crucial in problem solving and decision-making processes.