Salaries payable amounting to P 34,000 was not recorded in 2021. Accrued vacation pay for the year 2021 for P 62,500 was not recorded due to lack of knowledge by the bookkeeper.
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These errors were discovered in the account of Golden Arches Company:
- Salaries payable amounting to P 34,000 was not recorded in 2021.
- Accrued vacation pay for the year 2021 for P 62,500 was not recorded due to lack of knowledge by the bookkeeper.
- Insurance for a 12-month period purchased on November 1, 2021 was charged to expenses in the amount of P 37,200.
P 64,500 underP 6,200 underP 65,500 overP 59,300 over
Step by step
Solved in 2 steps
- The Colby Group has the following unadjusted trial balance as of August 31, 2019: The debit and credit totals are not equal as a result of the following errors: a. The cash entered on the trial balance was understated by 6,000. b. A cash receipt of 5,600 was posted as a debit to Cash of 6,500. c. A debit of 11,000 to Accounts Receivable was not posted. d. A return of 150 of defective supplies was erroneously posted as a 1,500 credit to Supplies. e. An insurance policy acquired at a cost of 1,200 was posted as a credit to Prepaid Insurance. f. The balance of Notes Payable was understated by 20,000. g. A credit of 4,800 in Accounts Payable was overlooked when determining the balance of the account. h. A debit of 7,000 for a withdrawal by the owner was posted as a credit to Terry Colby, Capital. i. The balance of 58,100 in Rent Expense was entered as 51,800 in the trial balance. j. Gas, Electricity, and Water Expense, with a balance of 24,150, was omitted from the trial balance. Instructions 1. Prepare a corrected unadjusted trial balance as of August 31, 2019. 2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800Dudley Company failed to recognize the following accruals. It also recorded the prepaid expenses and unearned revenues as expenses and revenues, respectively', in the following year when paid or collected. The reported pretax income was 20,000 in 2018, 25,000 in 2019, and 23,000 in 2020. Required: 1. Compute the correct pretax income for 2018, 2019, and 2020. 2. Prepare the journal entries necessary in 2020 if the errors are discovered at the end of that year. Ignore income taxes. 3. Prepare the journal entries necessary in 2021 if the errors are discovered at the end of that year. Ignore income taxes.
- Tech Support Services has the following unadjusted trial balance as of January 31, 2019: The debit and credit totals are not equal as a result of the following errors: a. The cash entered on the trial balance was overstated by 8,000. b. A cash receipt of 4,100 was posted as a debit to Cash of 1,400. c. A debit of 12,350 to Accounts Receivable was not posted. d. A return of 235 of defective supplies was erroneously posted as a 325 credit to Supplies. e. An insurance policy acquired at a cost of 3,000 was posted as a credit to Prepaid Insurance. f. The balance of Notes Payable was overstated by 21,000. g. A credit of 3,450 in Accounts Payable was overlooked when the balance of the account was determined. h. A debit of 6,000 for a withdrawal by the owner was posted as a debit to Thad Engelberg, Capital. i. The balance of 28,350 in Advertising Expense was entered as 23,850 in the trial balance. j. Miscellaneous Expense, with a balance of 4,600, was omitted from the trial balance. Instructions 1. Prepare a corrected unadjusted trial balance as of January 31, 2019. 2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Explain.A review of Anderson Corporations books indicates that the errors and omissions pertaining to the balance sheet accounts shown as follows had not been corrected during the applicable years. The net income per the books is: 2017, 10,000; 2018, 12,000; 2019, 15,000; and 2020, 20,000. No dividends were declared during these years and no adjustments were made to retained earnings. The Retained Earnings balance on December 31, 2020, is 50,000. Omissions Required: Determine the correct net income for the years 2017, 2018, 2019, and 2020, and the adjusted balance sheet accounts as of December 31, 2020. Ignore possible income tax effects.At the end of 2019, Framber Company received 8,000 as a prepayment for renting a building to a tenant during 2020. The company erroneously recorded the transaction by debiting Cash and crediting Rent Revenue in 2019 instead of 2020. Upon discovery of this error in 2020, what correcting journal entry will Framber make? Ignore income taxes.
- On July 1, a client paid an advance payment (retainer) of $5,000 to cover future legal services. During the period, the company completed $3,500 of the agreed-on services for the client. There was no beginning balance in the Unearned Revenue account for the period. Based on the information provided, A. Make the December 31 adjusting journal entry to bring the balances to correct. B. Show the impact that these transactions had.These errors were discovered in the account of Golden Arches Company: Salaries payable amounting to P 34,000 was not recorded in 2021. Accrued vacation pay for the year 2021 for P 62,500 was not recorded due to lack of knowledge by the bookkeeper. Insurance for a 12-month period purchased on November 1, 2021 was charged to expenses in the amount of P 37,200. a. P 6,200 under b. P 65,500 over c. P 59,300 over d. P 64,500 underBLACK WIDOW Corporation failed to recognize accruals and prepayments since the inception of its business three years ago. The accruals and prepayments at the end of 2021 are as follows: Unused office supplies 25,000 Accrued utilities 52,000 Rent revenue collected in advance 87,500 Interest receivable 65,500 Accrued wages 49,100 Prepaid insurance 60,000 4What is the net effect of the above errors in the 2021 netincome? (If understated, put a negative (-) sign before thenumerical value)
- Below are three independent and unrelated errors. On December 31, 2020, Wolfe-Bache Corporation failed to accrue salaries expense of $1,400. In January 2021, when it paid employees for the December 27–January 2 workweek, Wolfe-Bache made the following entry: Salaries expense 1,400 Cash 1,400 On the last day of 2020, Midwest Importers received a $82,000 prepayment from a tenant for 2021 rent of a building. Midwest recorded the receipt as rent revenue. The error was discovered midway through 2021. At the end of 2020, Dinkins-Lowery Corporation failed to accrue interest of $7,200 on a note receivable. At the beginning of 2021, when the company received the cash, it was recorded as interest revenue. Required:For each error:1. What would be the effect of each error on the income statement and the balance sheet in the 2020 financial statements?2. Prepare any journal entries each company should record in 2021 to correct the errors.Clock Company showed the following errors in their account during December 31, 2021: Dividends of P 100,000 had been declared but was not recorded on December 10, 2021. Buildings and equipment maintenance for P 480,000 had been debited to expense at the end of April 2020. It had an estimated life of 8 years. The company failed to record sales commissions payable amounting to P 10,500 and P 19,000 at the end of 2020 and 2021, respectively. Supplies on hand amounting to P 6,000 and P 15,000 were not recognized at the end of 2020 and 2021, respectively. What is the net effect of the error in the 2021 net income? a.P 59,500 over b.P 72,200 under c.P 75,000 over d.P 70,000 overPharoah Company discovered the following errors made in January 2020. 1. A payment of Salaries and Wages Expense of $310 was debited to Equipment and credited to Cash, both for $310. 2. A collection of $7,900 from a client on account was debited to Cash $790 and credited to Service Revenue $790. 3. The purchase of equipment on account for $480 was debited to Equipment $720 and credited to Acc
