Question 15 of 34 During 2014, Gambler Company discovered that the ending inventories on its financial statements were incorrect by the following amounts: 2012 P120,000 understated 2013 150,000 overstated Gambler uses the periodic system to ascertain year-end quantities that are converted to peso amounts using FIFO cost method. Prior to any adjustments for these errors and ignoring income taxes, how much would be the accumulated profits and losses of Gambler at January 1, 2 Select the correct response: Correct P30,000 overstated P150,000 overstated OP270,000 overstated
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- Reading 3M Companys Balance Sheet: Accounts Receivable The following current asset appears on the balance sheet in 3M Companys Form 10-K for the year ended December 31, 2013 (amounts in millions of dollars): Required What is the balance in 3M Companys Allowance for Doubtful Accounts at the end of 2013 and 2012? What is the net realizable value of 3M Companys accounts receivable at the end of each of these two years? What caused increases in the allowance account during 2013? What caused decreases? Explain what a net decrease in the account for the year means.1. During 2014, Gambler Company discovered that the ending inventories on its financialstatements were incorrect by the following amounts:2012 P120,000 understated2013 150,000 overstatedGambler uses the periodic system to ascertain year-end quantities that are converted to pesoamounts using FIFO cost method.Prior to any adjustments for these errors and ignoring income taxes, how much would be theaccumulated profits and losses of Gambler at January 1, 2014? 2. Market Corporation failed to recognize accruals and prepayments since the inception of itsbusiness three years ago. The accruals and prepayments at the end of 2014 are given below:Prepaid insurance P60,000Accrued wages 75,000Rent revenue collected in advance 96,000Interest receivable 81,000What is the net effect of the above errors in the 2014 net income?Question 35 Armstrong Inc. is a calendar-year corporation. Its financial statements for the years ended 12/31/20 and 12/31/21 contained the following errors: 2020 2021 Ending inventory $50,000 overstatement $80,000 understatement Depreciation expense 20,000 understatement 40,000 overstatement Assume that the 2020 errors were not corrected and that no errors occurred in 2019. By what amount will 2020 income before income taxes be overstated or understated? $30,000 understatement $30,000 overstatement $70,000 overstatement $70,000 understatement
- tudent question Time to preview question: 00:09:07 Company is subject to an income tax rate of 30%. It has the provided the following data on December 31, 2021: Income Statement Items for 2021: Net sales P3,600,000Cost of goods sold 1,100,000Operating expenses including depreciation 840,000Depreciation expense 60,000Interest expense 100,000Income tax expense ? Other information for 2021: Payment of bank loan 300,000 Dividends paid to stockholders P250,000 Balance Sheet Items December 31, 2021 December 31, 2020Cash and cash equivalents 2,000,000 P1,750,000Accounts receivable 670,000 410,000Inventory 430,000 220,000Supplies 18,000 12,000Accounts payable 520,000 380,000Accrued liabilities 72,000 53,000Property and equipment, net 1,700,000 2,100,000Loans payable 1,000,000 1,500,000Share capital 1,000,000 1,000,000Retained earnings ? ? Based on the above, answer the following questions for 2021: (Round answers to whole numbers for monetary amounts while for percentages,…Bol Company's December 31 year-end financial statements had the following errors: December 31, 2020 December 31, 2021 Prepaid insurance 16,000 understated Unearned rental 10,000 understated Depreciation expense 7,200 understated Ending inventory 27,000 understated 39,600 overstated There were no other errors during the year 2020 or 2021 and no corrections have been made for any of the errors. (Ignore income tax considerations) 1. What is the net effect of the errors on Bols 2021 net income? 2. What is the net effect of the errors in Bols December 31, 2021 retained earnings? 3. What is the net effect of the errors in Bol's December 31, 2021 working capital (current assets less current liabilities)?Exhibit7.5 Sullivan Produce Co. switched from FIFO to LIFO on January1,2018, for external reporting and income tax purposes, while retaining FIFO for internal reports. On that date, the FIFO inventory equaled $360,000. The ensuing three-year period resulted in the following: December31,2018 Year-End Costs $438,000 Cost Index 1.05 December 31,2019 Year-End Costs $460,000 Cost Index 1.15 December 31, 2020 Year-End Costs $520,000 Cost Index 1.25 Refer to Exhibit 7-5, The ending inventory at December 31,2020, using the dollar-value LIFO method would be a. $422,000 b. $402,000 c $426,000 d. $420,400 Refer to Exhibit7-5, the ending inventory at December 31,2019, at base-year price is: a.$400,000 b. $402,000 c.$406,000 d.$424,000
- Question 54 On December 31, 2021 Dean Company changed its method of accounting for inventory from weighted average cost method to the FIFO method. This change caused the 2021 beginning inventory to increase by $960,000. The cumulative effect of this accounting change to be reported for the year ended 12/31/21, assuming a 20% tax rate, is $192,000. $960,000. $0. $768,000.192 AM Beauty Inc. is a calendar-year corporation. Its financial statements for the years 2026 and 2025 contained errors as follows: 2026 2025 Ending inventory $12,000 overstated $25,000 overstated What will be the impact on the 2025 financial statements? Will these items be overstated or understated and by how much? Cost of goods sold Income before taxes Retained earnings What will be the impact on the 2026 financial statements? Will these items be overstated or understated as compared to actual results? By how much? Cost of goods sold Income before taxes Retained earnings What will happen when AM Beauty ultimately corrects its physical inventory count?During 2020, Company discovered that the ending inventories on its financial statements were incorrect by the following amounts: 2018 P120,000 2019 150,000 company uses the periodic system to ascertain year-end quantities that are converted to peso amounts using FIFO cost method. Prior to any adjustments for these errors and ignoring income taxes, how much would be the accumulated profits and losses of company at January 1, 2020? A. P150,000 overstated B. P30,000 overstated C. 0 D. P270,000 overstated
- 8 Cribbage Company had income before income tax of $164,000 last quarter and a 34% tax rate. Its net income should be reported as: A. $55,760. B. $108,240. C. $(55,760). D. $248,485. ANSWERPROBLEM 6: XXX Company is preparing its 2021 financial statements. Prior to any adjustments, inventory is valued at P1,605,000. The following information has been found relating to certaininventory transactions from your cut-off test: A. Goods valued at P110,000 are on consignment with a customer. These goods werenot included in the ending inventory figure. B.Goods costing P87,000 were received from a vendor on January 5, 2022. The relatedinvoice was received and recorded on January 12, 2022. The goods were shippedonDecember 31, 2021, terms FOB shipping point. C. Goods costing P85,000, sold for P102,000, were shipped on December 31, 2021, andwere delivered to the customer on January 2, 2022. The terms of the invoice wereFOBshipping point. The goods were included in the ending inventory for 2021 and thesalewas recorded in 2022. D. A P35,000 shipment of goods to a customer on December 31, terms FOB destinationwas not included in the year-end inventory. The goods cost P26,000…PROBLEM 2 (ftg revised) Your audit of revenue of Pure Water Products reported sales during 2020 of P895,000. When you perform analytical audit procedures for the company’s costs and expenses, you determined that the following were applied consistently: Pure's gross profit percentage is 55 percent. Selling expenses are 18 percent of sales General and administrative expenses are equal to 80 percent of selling expenses. Purchases of inventory during 2020 totaled P466,250 and a count of inventory on hand at the end of the year totaled P189,500. Pure's income tax rate is 30 percent and the company has 60,000 shares of ordinary share outstanding. As an auditor of Pure Water Products, prepare an income statement, including earnings per share data, for the year ended December 31, 2020.