Reference no: EM133542186

Question: You are hired to review the accounting records of Sheridan Inc. (a public corporation) before it closes its revenue and expense accounts as at December 31, 2023, the end of its current fiscal year. The following information comes to your attention. During the current year, Sheridan Inc. changed its shipment policy from f.o.b. destination to f.o.b. shipping point. This would result in an additional $50,000 of revenue being recorded for fiscal 2023. The estimated remaining useful life of its manufacturing equipment was reviewed by management and increased by five years. This reduced depreciation expense by $30,000 during fiscal 2023. Due to the recent deterioration in the age of outstanding accounts receivable, Sheridan's controller changed the percentage of accounts receivable from 4.5% to 6% when arriving at the allowance for doubtful accounts for the year ended December 31, 2023. This revision in the percentage used was applied to the previous year, and an additional $50,000 was recorded as bad debt expense for the year ended December 31, 2022. The controller changed the classification of one expense on the comprehensive income statements for 2023 and 2022.