Answered You can hire a professional tutor to get the answer.
Bausch amp; Lomb, maker of eye-care products, found itself in the news because of certain procedures that were outside accepted accounting and...
Bausch & Lomb, maker of eye-care products, found itself in the news because of certain procedures that were outside accepted accounting and business practices. The note below from its 1995 annual report provides information about the company's problems.Prior period AdjustmentsThe Company has restated its financial statements for the years ended December 31, 1994 and December 25, 1993. This action was taken as a result of an ongoing investigation which identified uncertainties surrounding the execution of a fourth quarter 1993 contact lens sales program and the improper recording of 1993 sunglass sales in Southeast Asia. In the fourth quarter of 1993 a marketing program was initiated to implement a business strategy to shift responsibility for the sale and distribution of a portion of the U.S. traditional contact lens business to optical distributors. Subsequently, this strategy proved unsuccessful and, in the 1994 third quarter, led to the implementation of a new pricing policy for traditional contact lenses and a decision to accept on a one-time basis returns from these distributors. The investigation of this marketing program disclosed instances where unauthorized terms may have been or were offered which were inconsistent with the stated terms and conditions of the program. The resulting uncertainties relating to the execution of this marketing program led to a decision to restate the 1993 financial statements to account for shipments under the program as consigned inventory and to record revenues when the products were sold by the distributors to their customers and to reverse the effect of subsequent product returns and pricing adjustments related to this program which had been previously recognized in 1994. The investigation of Southeast Asia sunglass sales disclosed that in certain instances distributor transactions recorded as revenues in 1993 had not actually resulted from a sale to those customers, and thus were improperly recorded. The 1993 financial statements have been restated to reverse the improperly recorded sales with a corresponding restatement of the 1994 financial statements to reverse the effect of sales returns previously recognized in that period. In the opinion of management, all material adjustments necessary to correct the financial statements have been recorded. The impact of these adjustments on the Company's financial results as originally reported is summarized below:1994 1993-----------------------------------------------------------------------------------------Dollar Amounts In Thousands (Except Per Share Data)As Reported As Restated As Reported As Restated-----------------------------------------------------------------------------------------Net Sales:Healthcare $1,227,648 $1,249,923 $1,191,467 $1,169,192Optics 622,904 642,763 680,717 660,858-----------------------------------------------------------------------------------------Total $1,850,552 $1,892,686 $1,872,184 $1,830,050=========================================================================================Business Segment Earnings:Healthcare $73,466 $91,541 $210,393 $192,318Optics 64,148 72,075 87,456 79,529=========================================================================================Total $137,614 $163,616 $297,849 $271,847=========================================================================================Net Earnings $13,478 $31,123 $156,547 $138,902=========================================================================================Net Earnings Per Share $0.23 $0.52 $2.60 $2.31=========================================================================================Retained Earnings At End of Year $846,245 $846,245 $889,325 $871,680Review this information to answer the questions that follows:1. What exactly was the company doing that was wrong?2. Compare the “As Reported” and “As Restated” columns to determine what income was included in both categories over the combined 2-year period. What did the company gain?3. If this error had been uncovered in 1994 after the 1993 reporting year had been closed, what journal entry would have been made to correct the error?4. When this error was uncovered in 1995 after the 1994 reporting year had been closed, what journal entry was made to correct the error?Stice Intermediate Accounting 17e"
