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PROBLEM 6-5 Comprehensive You have been asked by a client to audit the financial statements of Half-Hearted Company for the first time. In examining the books, you found out that certain adjustments had been overlooked at the end of 2020 and 2021. You also discovered that other items had been improperly recorded. These omissions and other failures for each year are summarized below: 2020 2021 Merchandise inventory, end P10,000 overstated P8,000 understated Advances to supplier were purchases but the merchandise was received in the following year: Advances from customers recorded as sales but the goods were delivered in the following year: Improvements on building had been charged to expense on January 1, 2020. Improvements have a life of 5 years. On January 1, 2020, an equipment costing P40,000 was sold for P20,000. At the date of sale, the equipment had an accumulated depreciation of P15,000. The cash received was recorded as other income in 2020. recorded as 30,000 40,000 20,000 70,000 100,000 Questions: Based on the above and the result of your audit, answer the following: 1. What is the total effect of the errors on the 2020 net income? c. Overstated by P115,000 d. Understated by P55,000 Understated by P45,000 b. Understated by P25,000 a. 2. What is the total effect of the errors on the 2021 net income? c. Overstated by P68,000 d. Overstated by P38,000 Overstated by P32,000 b. Overstated by P42,000 a. 3. What is the total effect of the errors on the company's working capital on December 31, 2021? Overstated by P22,000 b. Understated by P48,000 c. Overstated by P70,000 d. Overstated by P30,000 a.

PROBLEM 6-5 Comprehensive You have been asked by a client to audit the financial statements of Half-Hearted Company for the first time. In examining the books, you found out that certain adjustments had been overlooked at the end of 2020 and 2021. You also discovered that other items had been improperly recorded. These omissions and other failures for each year are summarized below: 2020 2021 Merchandise inventory, end P10,000 overstated P8,000 understated Advances to supplier were purchases but the merchandise was received in the following year: Advances from customers recorded as sales but the goods were delivered in the following year: Improvements on building had been charged to expense on January 1, 2020. Improvements have a life of 5 years. On January 1, 2020, an equipment costing P40,000 was sold for P20,000. At the date of sale, the equipment had an accumulated depreciation of P15,000. The cash received was recorded as other income in 2020. recorded as 30,000 40,000 20,000 70,000 100,000 Questions: Based on the above and the result of your audit, answer the following: 1. What is the total effect of the errors on the 2020 net income? c. Overstated by P115,000 d. Understated by P55,000 Understated by P45,000 b. Understated by P25,000 a. 2. What is the total effect of the errors on the 2021 net income? c. Overstated by P68,000 d. Overstated by P38,000 Overstated by P32,000 b. Overstated by P42,000 a. 3. What is the total effect of the errors on the company's working capital on December 31, 2021? Overstated by P22,000 b. Understated by P48,000 c. Overstated by P70,000 d. Overstated by P30,000 a.

Intermediate Accounting: Reporting And Analysis
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
Chapter8: Inventories: Special Valuation Issues
Section: Chapter Questions
Problem 10E: Gross Profit Method: Estimation of Theft Loss You are requested by a client on September 28 to...
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1. Does the half-wave-rectifier voltmeter respond to the average value, the peak value, or the rms value? Is the meter face generally marked in sverage, pesk, or rms values? 5. Is the s-e sensitivity ss high ss, the same as, or lower than the d-c sensitivity of given meter movement? 6. Why do the voltage readings tend to bunch somewhat on the lower e voltage ranges? 11. What effect does source resistance have upon peak-detector accuracy? Should the source resistance be very small or very large? 12. In a 99 percent accurate peak detector how large should the discharging time constant be compared to the period?
Transcribed Image Text:1. Does the half-wave-rectifier voltmeter respond to the average value, the peak value, or the rms value? Is the meter face generally marked in sverage, pesk, or rms values? 5. Is the s-e sensitivity ss high ss, the same as, or lower than the d-c sensitivity of given meter movement? 6. Why do the voltage readings tend to bunch somewhat on the lower e voltage ranges? 11. What effect does source resistance have upon peak-detector accuracy? Should the source resistance be very small or very large? 12. In a 99 percent accurate peak detector how large should the discharging time constant be compared to the period?
PROBLEM 6-5 Comprehensive You have been asked by a client to audit the financial statements of Half-Hearted Company for the first time. In examining the books, you found out that certain adjustments had been overlooked at the end of 2020 and 2021. You also discovered that other items had been improperly recorded. These omissions and other failures for each year are summarized below: 2020 2021 Merchandise inventory, end P10,000 overstated P8,000 understated Advances to supplier were recorded as purchases but the merchandise was received in the following year: Advances from customers recorded as sales but the goods were delivered in the following year: Improvements on building had been charged to expense on January 1, 2020. Improvements have 100,000 a life of 5 years. On January 1, 2020, an equipment costing P40,000 was sold for P20,000. At the date of sale, the equipment had an accumulated depreciation of P15,000. The cash received was recorded as 30,000 40,000 20,000 70,000 other income in 2020. Questions: Based on the above and the result of your audit, answer the following: 1. What is the total effect of the errors on the 2020 net income? c. Overstated by P115,000 d. Understated by P55,000 Understated by P45,000 b. Understated by P25,000 a. 2. What is the total effect of the errors on the 2021 net income? a. Overstated by P32,000 b. Overstated by P42,000 c. Overstated by P68,000 d. Overstated by P38,000 3. What is the total effect of the errors on the company's working capital on December 31, 2021? Overstated by P22,000 b. Understated by P48,000 c. Overstated by P70,000 d. Overstated by P30,000 a. 129
Transcribed Image Text:PROBLEM 6-5 Comprehensive You have been asked by a client to audit the financial statements of Half-Hearted Company for the first time. In examining the books, you found out that certain adjustments had been overlooked at the end of 2020 and 2021. You also discovered that other items had been improperly recorded. These omissions and other failures for each year are summarized below: 2020 2021 Merchandise inventory, end P10,000 overstated P8,000 understated Advances to supplier were recorded as purchases but the merchandise was received in the following year: Advances from customers recorded as sales but the goods were delivered in the following year: Improvements on building had been charged to expense on January 1, 2020. Improvements have 100,000 a life of 5 years. On January 1, 2020, an equipment costing P40,000 was sold for P20,000. At the date of sale, the equipment had an accumulated depreciation of P15,000. The cash received was recorded as 30,000 40,000 20,000 70,000 other income in 2020. Questions: Based on the above and the result of your audit, answer the following: 1. What is the total effect of the errors on the 2020 net income? c. Overstated by P115,000 d. Understated by P55,000 Understated by P45,000 b. Understated by P25,000 a. 2. What is the total effect of the errors on the 2021 net income? a. Overstated by P32,000 b. Overstated by P42,000 c. Overstated by P68,000 d. Overstated by P38,000 3. What is the total effect of the errors on the company's working capital on December 31, 2021? Overstated by P22,000 b. Understated by P48,000 c. Overstated by P70,000 d. Overstated by P30,000 a. 129
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