3,900,000 and current liabilities of P2,000,000 on its statement of financial position as of December 31, 2017. The following items may have been recorded incorrectly. The company uses the periodic inventory system.   Goods purchased costing P220,000 were shipped FOB shipping point by a vendor on December 26. Acue received and recorded the invoice on December 29, 2017, but the goods were not included in Acue’s physical count of inventory because they were not received until January 4, 2018.   Goods purchased costing P200,000 were shipped FOB destination by a supplier on December 28. Acue received and recorded the invoice on December 31, but the goods were not included in Acue’s 2017 physical count of inventory because they

Financial Accounting
15th Edition
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter6: Accounting For Merchandising Businesses
Section: Chapter Questions
Problem 9PA: On December 31, 2019, the balances of the accounts appearing in the ledger of Wyman Company are as...
icon
Related questions
Topic Video
Question

Acue Company reported current assets of P3,900,000 and current liabilities of P2,000,000 on its statement of financial position as of December 31, 2017. The following items may have been recorded incorrectly. The company uses the periodic inventory system.

 

  • Goods purchased costing P220,000 were shipped FOB shipping point by a vendor on December 26. Acue received and recorded the invoice on December 29, 2017, but the goods were not included in Acue’s physical count of inventory because they were not received until January 4, 2018.

 

  • Goods purchased costing P200,000 were shipped FOB destination by a supplier on December 28. Acue received and recorded the invoice on December 31, but the goods were not included in Acue’s 2017 physical count of inventory because they were not received until January 2, 2018.

 

  • Goods held on consignment from Si Company were included in Acue’s December 31, 2017, physical count of inventory at P130,000.

 

1. By what amount will income (before taxes) be adjusted up or down as a result of the corrections?

110,000 increase
290,000 decrease
110,000 decrease
290,000 increase

2. What is the current ratio based on Acue’s statement of financial position (before corrections are made)?

1.84 to 1
1 to 1
0.51 to 1
1.95 to 1
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Accounting for Merchandise Inventory
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Financial Accounting
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Accounting: The Impact on Decision Make…
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:
9781285595047
Author:
Weil
Publisher:
Cengage
Financial Accounting
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning