ABC Company's December 31 year-end financial statements contained the following errors: 20x1 20x2 Ending inventory Depreciation Prepaid insurance 800,000 understated 400,000 overstated 150,000 understated 50,000 overstated In addition, on December 31, 20x2, a fully depreciated equipment was sold for 100,000 cash but the sale was not recorded until 2020. Ignore income tax considerations. Requirements: Determine the total effect of the errors on the following: 1. Net income for 20x1 2. Net income for 20x2 3. Retained earnings on December 31, 20x2
ABC Company's December 31 year-end financial statements contained the following errors: 20x1 20x2 Ending inventory Depreciation Prepaid insurance 800,000 understated 400,000 overstated 150,000 understated 50,000 overstated In addition, on December 31, 20x2, a fully depreciated equipment was sold for 100,000 cash but the sale was not recorded until 2020. Ignore income tax considerations. Requirements: Determine the total effect of the errors on the following: 1. Net income for 20x1 2. Net income for 20x2 3. Retained earnings on December 31, 20x2
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 10MC: Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended...
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