The CFO of First Things Computing. Inc. (FTC) prepared the following balance sheet as of December 31, 2019.

For the sake of simplicity, assume that FTC docs not incur income tax expense. Thus, the impact on equity can be computed as the combination of the impact on assets and the impact on the liabilities.
The CFO must make the following adjustments before finalizing the financial statements:
1. FTC will need to record some amount of bad debt expense. The offset will be a reduction in accounts receivable. This adjustment is a mailer of judgment, and reasonable estimates range between $ 1,000 and $3.000.
2. FTC will need to write down its inventory (i.e., reduce the reported value of inventory). The offset will be to cost of goods sold. This adjustment is a matter of judgment, and reasonable estimates range between $ 2,500 and $3,750.
3. FTC may need to record an impairment loss on its PPE (i.e., reduce the reported value of PPE). The offset will be an impairment loss reported on the statement of net income. This adjustment is a matter of judgment, and reasonable estimates range between $0 and $5,000.
4. FTC may need to record an impairment loss on its noncurrent investments (i.e., reduce the reported value of noncurrent investments). The offset will be an impairment loss reported on the statement of net income. This adjustment is a matter of judgment and reasonable estimates range between $250 and $750.
5. FTC may need to record a litigation contingency (i.e., it may need to record a liability for an unresolved lawsuit). The offset is to litigation expense. The lawsuit is expected to be settled in 2020. FTC's attorneys believe that they can provide a point estimate of amount for which FTC will be liable. The estimate will either be $2,000 or $10.000.
6 . FTC may need to reduce the reported amount of its deferred tax asset. The amount by which the asset needs to b e reduced is highly judgmental and ranges from $ 0 to $5.000. The offset to this adjustment is income tax expense. Assume the deferred tax asset is noncurrent.
7. FTC currently has unearned revenue on its balance sheet of $5,400. Up to $5,000 of this amount could possibly be recognized as revenue in 2019. However, this amount is a matter of judgment.

Required
a. If FTC makes the most conservative choices for all these adjustments that will result in the lowest net income number, what i s the impact on assets and liabilities in terms of absolute dollar impact and percentage change?
b. If FTC makes the least conservative choices for all these adjustments that will result in the highest net income number. what is the impact on assets and liabilities in terms of absolute dollar impact and percentage change?
c. What is the impact on the current ratio and the debt-to-equity ratio of these choices if management makes the most conservative choices? What is the impact on these ratios if management makes the least conservative choices?
d. Do you think that the management of FTC will care very much about the choices related to these adjustments?

First Things Computing, Inc Balance Sheet As ofDece mber 31, 2019 Assets CurrentAssets: $ 5000 Cash 700 Trading Securities at Fair Value Accounts Rece vable net 11 000 24,000 Merchand se hventory Office Supplies 600 Prepad Rent Total Current Assets 200 $ 41,500 Noncurrent Assets: $ 15 000 Investments Property, Pant and Equipment Land 20 000 Buildings Machinery a nd Equipment Less: Accumulated Depieciation 80 000 70 000 (62,000) 108 000 5 000 Total Property Plant, and Equipment net Deferred Tex Asset Intang be Assets Franchise - net 4,500 Other Assets 3.100 Toal Noncurrent As sets $135 600 $ 177, 100 Total Assets Liabilities Current Liabilities $ 2,700 Accounts Payab e Short term Notes Payab e 1,000 Crent Port on of Long-term Debt Interest Payab e Income Taxes Payable 300 200 1,500 Unearned Revenue 5,400 $ 11,100 Total Crrent Liabil ties Noncurrent Liabilities: $ 40 000 Notes Payab e due 10 years Bonds Payable, due 20 yrs 60 000 100 000 $ 11, 100 To tal Noncurrent Liabi ities Tatal Liab lit es Stockholders' Equty S 20 000 Common Stock - at par Addt anal Pad n Capita Retai red Eamings 30 000 5 000 Accumu ated Other Comprehens ve Income 11,000 $ 66 000 $ 177.100 Total Stockho ders' Equity Total Liabifit es and Stockhalders Equity