During the course of your examination of the financial statements of H Co., a new client, for the year ended December 31, 2020, you discover the following: Inventory at January 1, 2020, had been overstated by P3,000. Inventory at December 31, 2020, was understated by P5,000. An insurance policy covering three years had been purchased on January 2, 2019, for P1,500. The entire amount was charged as an expense in 2019. During 2020 the company received a P1,000 cash advance from a customer for merchandise to be manufactured and shipped during 2021. The P1,000 had been credited to sales revenues. The company's gross profit on sales is 50%. Net income reported on the 2020 income statement (before reflecting any adjustments for the above items) is P20,000. The proper net income for 2020 is
During the course of your examination of the financial statements of H Co., a new client, for the year ended December 31, 2020, you discover the following: Inventory at January 1, 2020, had been overstated by P3,000. Inventory at December 31, 2020, was understated by P5,000. An insurance policy covering three years had been purchased on January 2, 2019, for P1,500. The entire amount was charged as an expense in 2019. During 2020 the company received a P1,000 cash advance from a customer for merchandise to be manufactured and shipped during 2021. The P1,000 had been credited to sales revenues. The company's gross profit on sales is 50%. Net income reported on the 2020 income statement (before reflecting any adjustments for the above items) is P20,000. The proper net income for 2020 is
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
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 8E: Cost of Goods Sold, Income Statement. and Statement of Comprehensive Income Gaskin Company derives...
Related questions
Question
During the course of your examination of the financial statements of H Co., a new client, for the year ended December 31, 2020, you discover the following:
- Inventory at January 1, 2020, had been overstated by P3,000.
- Inventory at December 31, 2020, was understated by P5,000.
- An insurance policy covering three years had been purchased on January 2, 2019, for P1,500. The entire amount was charged as an expense in 2019.
During 2020 the company received a P1,000 cash advance from a customer for merchandise to be manufactured and shipped during 2021. The P1,000 had been credited to sales revenues. The company's gross profit on sales is 50%.
Net income reported on the 2020 income statement (before reflecting any adjustments for the above items) is P20,000.
The proper net income for 2020 is
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
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.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College