Bell Farm and Garden Equipment reported the following information for Year 2: Net Sales of Equipment ________________________ $2,450,567 Other Income __________________________________ 6,786 Cost of Goods Sold _____________________________ 1,425,990 Selling, General, and Administrative Expense _____ 325,965 Net Operating Income ____________________ $705,398 Selected information from the balance sheet as of December 31, Year 2, follows: Cash and Marketable Securities __________________ $113,545 Inventory _______________________________________ 248,600 Accounts Receivable ____________________________ 82.462 Property, Plant, and Equipment - Net _____________ 335,890 Other Assets ____________________________________ 5,410 Total Assets _____________________________________ $785,907 Assume that a major customer returned a large order to Bell on December 31, Year 2. The amount of the sale had been $146,800 with a cost of sales of $94,623. The return was recorded in the books on January 1, Year 3. The company president does not want to correct the books. He argues that it makes no difference as to whether the return is recorded in Year 2 or Year 3. Either way, the return has been duly recognized. Required: Assume that you are the CFO for Bell Farm and Garden Equipment Co. Explain to the president how omitting the entry on December 31, Year 2, could cause the financial statements to be misleading to investors and creditors. Explain how omitting the return from the customer would affect net income and the balance sheet. In addition, explain why the president might want to record the return on January 1, Year 3, instead of December 31, Year 2.