the years ended December 2019, 2020, and 2021 indicate the following net Case 3-Effects of Error on Net Pn January 2, 2019, a piece of equipment costing P250,000 was sold r P120,000. At the date of sale, the equipment had an accumulated income: 2021 - P367,000 2020 - P402,000 2019-P320,000 An examination of the accounting records for these years indicates h several errors were made in arriving at the net income amounts reported The following errors were discovered: a. Sale of merchandise on account amounting to P100,000 was recorded twice at the end of 2021. . Goods costing P24,000 were in transit from a supplier on December 31, 2019. The goods were appropríately included in the ending inventory but the corresponding purchase was not recorded until it is received the following year. Accrued salaries were consistently omitted from the records. The amounts omitted were: 2019-P35,000 The merchandise inventory at December 31, 2020 was overstated by P40,000 as the result of errors made in the footings and extensions on the inventory sheets. Unexpired insurance of P22,000 applicable to 2020 was expensed n 2019. Interest receivable of P12,500 was not recorded on December S. 2021. 2020 - P47,000 2021- P29,000 preciation of P100,000. The cash received was ro
the years ended December 2019, 2020, and 2021 indicate the following net Case 3-Effects of Error on Net Pn January 2, 2019, a piece of equipment costing P250,000 was sold r P120,000. At the date of sale, the equipment had an accumulated income: 2021 - P367,000 2020 - P402,000 2019-P320,000 An examination of the accounting records for these years indicates h several errors were made in arriving at the net income amounts reported The following errors were discovered: a. Sale of merchandise on account amounting to P100,000 was recorded twice at the end of 2021. . Goods costing P24,000 were in transit from a supplier on December 31, 2019. The goods were appropríately included in the ending inventory but the corresponding purchase was not recorded until it is received the following year. Accrued salaries were consistently omitted from the records. The amounts omitted were: 2019-P35,000 The merchandise inventory at December 31, 2020 was overstated by P40,000 as the result of errors made in the footings and extensions on the inventory sheets. Unexpired insurance of P22,000 applicable to 2020 was expensed n 2019. Interest receivable of P12,500 was not recorded on December S. 2021. 2020 - P47,000 2021- P29,000 preciation of P100,000. The cash received was ro
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 8P: At the beginning of 2020, Holden Companys controller asked you to prepare correcting entries for the...
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Question
whats the answer in question 3?
Transcribed Image Text:the years ended December 2019, 2020, and 2021 indicate the following net
g. On January 2, 2019, a piece of equipment costing P250,000 was sold
for P120,000. At the date of sale, the equipment had an accumulated
depreciation of P100,000. The cash received was recorded as income
Case 3-Effects of Error on Net Income
income:
2021 - P367,000
2020-P402,000
2019-P320,000
An examination of the accounting records for these years indicates thet
several errors were made in arriving at the net income amounts reported
The following errors were discovered:
a. Sale of merchandise on account amounting to P100,000 was recorded
twice at the end of 2021,
b. Goods costing P24,000 were in transit from a supplier on December
31, 2019. The goods were appropriately included in the ending
inventory but the corresponding purchase was not recorded until it is
received the following year.
C. Accrued salaries were consistently omitted from the records. The
amounts omitted were:
2019-P35,000
2020 - P47,000
2021- P29,000
d. The merchandise inventory at December 31, 2020 was overstated by
P40,000 as the result of errors made in the footings and extensions on
the inventory sheets.
e. Unexpired insurance of P22,000 applicable to 2020 was expensed in
2019.
f. Interest receivable of P12,500 was not recorded on December 31.
2021.
Page 150
Transcribed Image Text:Chapter 1: Audit Planning and Misstatement
in 2019. In addition, depreciation was recorded for this equipment in
2019 at the rate of 10% of cost.
Determine the following as a result of your audit:
1. How much is the adjusted net income in 2018?
a. P218,000
b. P184,000
c. P164,000 d. P158,000
2. How much is the adjusted net income in 2019?
a. P321,000
b. P352,000
c. P388,000 d. P402,000
3. How much is the adjusted net income in 2020?
a. P337,500
LON
c. P537,500 d. P582,500
b. P487,500
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