Rocket Man Incorporated provided the following financial

statement information for #3334

Rocket Man, Incorporated provided the following financial statement information for 2016:Credit
Sales……………………………………………………. $ 2,500,000Retained Earnings, January 1, 2016 ……
1,600,000Sales…………………………………………………….……… 3,000,000Selling and Administrative
Expenses………………………….. 480,000Restructuring Gain (pretax)……………………………………. 72
Dividends Declared……………………………………… 190,000Cost of Goods Sold…………………………
1,755,000Error Correction: 2011 rent was unpaid and unrecorded……… 40,000Interest
Income………………………………………………… 480,000Interest Expense…………………………………
Sale of Investments (pretax)…………………………… 500,000• Early in 2016, Rocket Man changed its pl
and equipment accounting for depreciation from the double-declining balance method to the
straight- line method. Rocket Man purchased the assets at the beginning of 2015 for $ 600,000;
they had no scrap value and useful lives of 10 years. The balance in the accumulated
depreciation account at the beginning of 2016 amounted to $ 120,000. Rocket Man recorded
the straight-line depreciation expense of $ 53,333 in 2016 and included it in the $ 480,000
reported for selling, general, and administrative expenses. Depreciation expense would have
been $ 96,000 if Rocket Man still used the double-declining balance method.• Bad debt
expense for 2016 of $ 50,000 is included in selling, general, and administrative expenses on the
income statement. Rocket Man uses the percentage-of-credit-sales method of estimating bad
debt expense. The estimated percentage was 1% in both 2014 and 2015 but changed to 2% in
2016.Requireda. Assuming a tax rate of 40%, prepare the multiple-step income statement for
Rocket Man for the year ended December 31, 2016.b. Compute the cumulative effect of the
accounting changes made in 2016.c. Prepare the journal entries to record the accounting
changes made in 2016.d. Prepare the footnote disclosures required for the accounting changes
made in 2016e. Prepare the retained earnings column of the statement of stockholders’ equity
for the year ended December 31, 2016.View Solution:
Rocket Man Incorporated provided the following financial statement information for

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