Willie Cheetum is the CEO of Happy Foods a distributor

Willie Cheetum is the CEO of Happy Foods, a distributor of produce to grocery store chains
throughout the Midwest. At the end of the year, the company's accounting manager provides
Willie with the following information, before any adjustment.Accounts receivable
...........................................$1,000,000Estimated percentage uncollectible
.................................10%Allowance for uncollectible accounts ................$30,000
(credit)Operating income ...............................................$250,000Willie's compensation contract
states that if the company generates operating income of at least $200,000, he will get a salary
bonus early next year.Required:1. Record the adjustment for uncollectible accounts using the
accountant's estimate of 10% of accounts receivable.2. After the adjustment is recorded in
Requirement 1, what is the revised amount of operating income? Will Willie get his salary
bonus?3. Willie instructs the accountant to record the adjustment for uncollectible accounts
using 7% rather than 10% of accounts receivable. Now will Willie get his salary bonus?
Explain.4. By how much would total assets and operating income be misstated using the 7%
amount?View Solution: Willie Cheetum is the CEO of Happy Foods a distributor
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