Bryant Corporation was incorporated on December 1, 2012, and began operations one week later. Before

Bryant Corporation was incorporated on December 1, 2012, and began operations one week later. Before closing the books for the fiscal year ended November 30, 2013, Bryant s controller prepared the following financial statements: Income Statement For Year Ended November 30, 2013 Net sales …………………………….$2,950,000 Operating expenses: Cost of goods sold ………………….$1,670,000 Selling and administrative ………………650,000 Depreciation ……………………………..40,000 Research and development cost …………30,000 Total expenses ………………………$2,390,000 Income before income taxes …………$ 560,000 Income tax expense ……………………168,000 Net income …………………………..$ 392,000 Bryant is in the process of negotiating a loan for expansion purposes, and the bank has requested audited financial statements. During the course of the audit, the following additional information was obtained: a. Included in selling and administrative expenses were $5,000 of costs incurred on software being developed for sale to others. The technological feasibility of the software has been established. b. Based on an aging of the accounts receivable as of November 30, 2013, it was estimated that $36,000 of the receivables will be uncollectible. c. Inventories at November 30, 2013, did not include work in process inventory costing $12,000 sent to an outside processor on November 26, 2013.

 

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