Cubs White Sox Sales $6,000,000 $5,000,000 Cost of Goods Sold 3,200,000 2,200,000 Gross Margin 2,800,000 2,800,000 Uncollectible Accounts Expense 300,000 200,000 Salary Expense 900,000 900,000...

	Cubs	White Sox
Sales	$6,000,000	$5,000,000
Cost of Goods Sold	3,200,000	2,200,000
Gross Margin	2,800,000	2,800,000
Uncollectible Accounts Expense	300,000	200,000
Salary Expense	900,000	900,000
Depreciation Expense	400,000	325,000
Advertising Expense	0	50,000
Impairment Charges	0	25,000
Net Income	$1,300,000	$1,300,000

The above 2020 income statements are for the Cubs and WhiteSox Corporations.

Additional information:

Cubs: LIFO method for inventory, paid 2020 executive bonuses of $75,000, double declining balance method of depreciation, delayed advertising during 2020.

White Sox: FIFO method for inventory, postponed executive bonuses, straight line method of depreciation.

In the boxes listed below answer the following:

1. Which company has higher earnings quality?

2. List 3 reasons why the company you selected has higher earnings quality. (just list.. .you do not need to explain)

Jun 11, 2022

SOLUTION.PDF

Cubs White Sox Sales $6,000,000 $5,000,000 Cost of Goods Sold 3,200,000 2,200,000 Gross Margin 2,800,000 2,800,000 Uncollectible Accounts Expense 300,000 200,000 Salary Expense 900,000 900,000...

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