Example 3 Joseph Co. began operations on January 1, 2020. Financial statements for 2020 and 2021 contained the following errors: Ending Inventory Insurance Expense December 31, 2020 $80,000 Overstated 42,000 Overstated December 31, 2021 $114,000 Overstated 42,000 Understated In addition, on December 26, 2021 fully depreciated equipment was sold for $53,000, but the sale was not recorded until 2022. No corrections have been made for any of the errors. Required: Ignoring income taxes, show your calculation of the total effect of the errors on 2021 net income.
Example 3 Joseph Co. began operations on January 1, 2020. Financial statements for 2020 and 2021 contained the following errors: Ending Inventory Insurance Expense December 31, 2020 $80,000 Overstated 42,000 Overstated December 31, 2021 $114,000 Overstated 42,000 Understated In addition, on December 26, 2021 fully depreciated equipment was sold for $53,000, but the sale was not recorded until 2022. No corrections have been made for any of the errors. Required: Ignoring income taxes, show your calculation of the total effect of the errors on 2021 net income.
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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