What is the net effect of the above errors on 2019 & 2020 net income?
Q: On December 31, 2022, Bramble Company prepared an income statement and balance sheet and failed to…
A: Adjusting entries have a vital role in the preparation of financial statements. Depreciation,…
Q: ABC Company reported net income and retained earnings for a two-year period as follows: 2020 2021…
A: The adjusted net income for any accounting year is equal to the net income adjusted for al the…
Q: During 2020, Company discovered that the ending inventories on its financial statements were…
A: A periodic inventory system is the method of the inventory system that measures physical available…
Q: Records showed that as of December 31, 2020, accrued salaries payable of P21,000 were not recorded…
A: Records appearing on 31st December 2020 which were not recorded or error appeared are as follows:-…
Q: The ledger of AISExperts Inc. contained the following balances after adjustment, but before closing,…
A: First we need to prepare Trial Balance to know the balance of opening retained earnings
Q: As of January 1, Terrace Waters, Capital had a credit balance of $500,000. During the year,…
A: a.The balance of T's capital at the end of the year is calculated as follows:
Q: Crane Corporation’s trial balance at December 31, 2020, is presented below. All 2020 transactions…
A: PLEASE LIKE THE ANSWER YOUR RESPONSE MATTERS Answer: Journal Entries No. Date Account…
Q: Fay Company had the following transactions during the quarter ended March 31, 2020. Loss from…
A: In income statement, the expense shown under is for the reporting period only. The period covered…
Q: The following information was extracted from the records of Terra Ltd for the year ended 30 June…
A: Given, Estimated useful life for tax purpose = 10 year Estimated useful life for accounting purpose…
Q: These items are taken from the 2020 trial balance of Suarez Inc. (Assume no taxes): Accounts payable…
A: SUAREZ INC Multi step…
Q: Winnie Ltd. provides computer services to business customers. In 2020, the Company failed to record…
A: Accrued service revenue is that revenue from sale of goods and services in the business, which is…
Q: On December 31, 2018, Alan and Company prepared an income statement and balance sheet but failed to…
A: Preparation of the table to show the effects of the four adjusting journal entries. We have,
Q: Elliott Corp. failed to record accrued salaries for 2016,$2,000; 2017, $2,100; and 2018, $3,900.…
A: Accounting error:Accounting errors can be defined as omission of the fundamental accounting…
Q: Shannon Corporation began operations on January 1, 2019. Financialstatements for the years ended…
A: An accounting equation is the basic principle of accounting that is used to prepare a balance sheet.…
Q: On December 31, 2022, Sheridan Company prepared an income statement and balance sheet, but failed to…
A: Financial statements are the statements showing the final accounts that show the true and fair value…
Q: While examining the accounts of Company on December 31, 2020, the following errors were uncovererd:…
A:
Q: Below is a list of selected account balances at the end of the accounting period in 2019, but before…
A: Trial balance: It implies to a statement or worksheet that shows all the ledger postings in a…
Q: ion and Statement of changes in equity on Excel.
A: Income statement refers to a statement which shows the revenue and expense of the company of a…
Q: Your examination of the financial statements of water Corporation revealed the following errors were…
A: Working capital is also called as floating capital or…
Q: The accounting staff of STUVWXYZ Company made the following entries in recognizing transactions of…
A: Prior Period Adjustments are the adjustments made in the current financial statements because of…
Q: As of Dec. 31, 2020, ABC Corporation reported total assets of P600,000 and total liabilities of…
A: Total Equity=Total Assets-Total Liabilities
Q: ABC Company reported net income and retained earnings for a two – year period as follows:…
A: Retained Earnings: It refers to the amount of earnings that are not paid to the shareholders, rather…
Q: ABC Company reported net income and retained earnings for a two-year period as follows: 2020 2021…
A:
Q: Before any year-end adjustments were made, the profit of Pedro Co. was P2,000,000. However, the…
A: Adjusting journal entry: To record any unrecognized income or expenses for the period company made…
Q: The net income per books of Kimberly Young Company was determined without knowledge of the errors…
A: While calculating net income , closing stock is shown on income side and opening stock on expenses…
Q: Lowell Corporation has used the accrual basis of accounting for several years. A review of the…
A: Net income: The bottom line of income statement which is the result of excess of earnings from…
Q: For this example, Zion Corporation discovers the following errors in January 2017 relating to 2016…
A: The question is related to the correcting entries in the books of Zion Company. The details are…
Q: In 2018, Winslow International, Inc.’s controller discovered that ending inventories for 2016 and…
A: Inventory error: Inventory errors are sometimes caused by making mistake in physical count, in…
Q: While examining the accounts of Grandma Company on December 31, 2015, the following errors were…
A: The question requires us to calculate the net effect of the error in the 2015 Net Income. The…
Q: Vertical Company has determined its 2019 and 2018 net income to be P115, 000 and P110, o00,…
A: Net income is the amount of the individual or person who earned after deducting the taxes as well as…
Q: B. While examining the accounts of Granny Co. on December 31, 2020, the following errors were…
A: Part1: Corrected Net Income of 2019 Unadjusted Net Income of 2019…
Q: The net income for 2018 reported by the accountant of OH MAH GAHD Company amounted to P634,500. Your…
A: Net Income: Sales less cost of products delivered, selling, general and administrative expenditures,…
Q: During an audt of Madison Company's December 31, 2020 records it was discovered that the company đid…
A: Introduction: A retained earnings statement is a financial statement that displays how a company's…
Q: The Managing Director of Kotoku Ltd received the financial reports for year ended 31st December 2019…
A:
Q: Tuscan Inc. had a retained earnings balance of $60,000 at December 31, 2018. During the year, Tuscan…
A: Statement of retained earnings: This statement shows the accumulated profits of an enterprise over a…
Q: Clock Company showed the following errors in their account during December 31, 2021: Dividends of P…
A: Solution Concept Failure to record dividend has no impact on the net income as dividend paid is the…
Q: Susan May Bakery, Inc. reported a prior-period adjustment in 2018. An accounting error caused net…
A: Formulas:
Q: During your audit of the books of Alarcon Corporation for the year ended December 31, 2021, you…
A: Since we answer up to 3 sub-parts, we'll answer the first 3. Please resubmit the question and…
Q: The Meow Company was organized on January 1, 2020, and since its inception has not recognized…
A: prepaid expenses are expenses related to future years but paid in advance. Unearned Income is the…
Q: ABC Company reported net income and retained earnings for a two – year period as follows:…
A: First of all, we have to calculate the adjusted Retained Earning balance on December 31, 2020.
Q: Accounting Muckingjay Inc. opened in 2022. The company reported sales revenue of $486,000 and…
A: The necessary journal entry to record the Net operating loss to be carried shall be Deferred tax…
Q: During your examination of the accounting books of South Sky Company for the year ended December 31,…
A: 2021 Particulars Reported net profit 1750000 Less: unpaid salaries (100000) Less:…
Q: The reported net incomes for the first 2 years of Pina Products, Inc., were as follows: 2021,…
A: GIVEN 1. Depreciation of equipment for 2021 was overstated $18,000. 2. Depreciation of…
Q: Analyzing the effect of prior-period adjustments Taylor Corporation discovered in 2019 that it had…
A: Prior period adjustment: It refers to the adjustment made in the current year to rectify the error…
Q: In December of 2019, a company received consulting services of $100,000. No entry was recorded for…
A: The expenses shall be recorded in the period to which they belongs, otherwise this may impact the…
Q: The reported net incomes for the first 2 years of Sandra Gustafson Products, Inc., were as follows:…
A: Following is the statement which will show the effect of rectification of errors on net earnings:
Q: Upon inspection of the records of Ally Company, the following facts were discovered for ended…
A: Adjusting entry refers to the process of adding entries into the journal ledger of the company in…
Q: The following accounts are extracted from the worksheet of X Company on December 31, 2020: Income…
A: Answer) Calculation of Net Extraordinary Loss Net Extraordinary Loss = Loss Due to Hurricane – Tax…
Q: Clock Company showed the following errors in their account during December 31, 2021: • Dividends of…
A: Solution Concept Failure to record dividend has no impact on the net income as dividend paid is the…
While examining the accounts of Combate Company on December 31, 2020, the following errors were uncovererd:
- Dividends of P100,000 had been declared on December 31, 2020 but was not recorded in the books.
- Improvements in Buildings and equipment for P480,000 had been debited to expense at the end of April in 2019. Improvements are estimated to have estimated life of 8 years.
- The company failed to record sales commissions payable amounting to P10,500 and P19,000 at the end of 2019 and 2020, respectively
- Supplies on hand amounting to P6,000 and P15,000 were not recognized at the end of 2019 and 2020, respectively.
What is the net effect of the above errors on 2019 & 2020 net income?
Step by step
Solved in 3 steps with 1 images
- 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 9,800At the beginning of 2020, Tanham Company discovered the following errors made in the preceding 2 years: Reported net income was 27,000 in 2018 and 35,000 in 2019. The allowance for doubtful accounts had a zero balance at the beginning of 2018. No accounts were written off during 2018 or 2019. Ignore income taxes. Required: 1. What is the correct net income for 2018 and 2019? 2. Prepare the adjusting journal entry in 2020 to correct the errors.Dudley 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.
- It is the end of 2019 and you are an accountant for Stone Company. During 2019, sales of the companys products slumped and the companys earnings are expected to be much less than those of 2018. The president comes to you with an idea. He says, Our companys property, plant, and equipment cost 300,000, and that is the amount we usually report on our balance sheet. However, I just had these assets appraised by an independent appraiser, and she says they are worth 400,000. I think that the company should report the property, plant, and equipment at this amount on its December 31, 2019, balance sheet and should report the 100,000 increase in value as a gain on the 2019 income statement. If we use this approach, it will show how much our company is really worth and increase our earnings. This will make our shareholders happy. What do you think? Required: Prepare a written response to the president.Visual Inspection Noble Companys accounting records provided the following changes in account balances and other information for 2019: Additional information: Net income was 9,900. Dividends were declared and paid. Land was sold for 1,700. No land was purchased. A building was purchased for 23,000. No buildings and equipment were sold. Bonds payable were issued at the end of the year. Two hundred shares of stock were issued for 15 per share. The beginning cash balance was 4,800. Required: Using visual inspection, prepare a 2019 statement of cash flows for Noble.It is February 16, 2020, and you are auditing Davenport Corporation's financial statements for 2019 (which will be issued in March 2020). You read in the newspaper that Travis Corporation, a major customer of Davenport, is in financial difficulty. Included in Davenports accounts receivable is 50,000 (a material amount) owed to it by Travis. You approach Jim Davenport, president, with this information and suggest that a reduction of accounts receivable and recognition of a loss for 2019 might be appropriate. Jim replies, Why should we make an adjustment? Ted Travis, the president of Travis Corporation, is a friend of mine; he will find a way to pay us, one way or another. Furthermore, this occurred in 2020, so lets wait and see what happens; we can always make an adjustment later this year. Our 2019 income and year-end working capital are not that high; our creditors and shareholders wouldnt stand for lower amounts than they already are. Required: From financial reporting and ethical perspectives, prepare a response to Jim Davenport regarding this issue.
- Trumpet and Trombone Manufacturing, Inc. began the year with a retained earnings balance of $545,000. The company had a great year and earned a net income of $190,000 this year and paid dividends of $14,000. Additionally, the companys controller determined that it had made an error when calculating tax expense in the preceding year, resulting in an understated expense amount of $22,000. What is the ending retained earnings balance?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.Worksheet Victoria Company has the following account balances on December 31, 2019, prior to any adjustments: Additional adjustment information: (a) depreciation on buildings, 1,100; on equipment, 600; (b) bad debts expense, 240; (c) interest accumulated but not paid: on note payable, 50; on mortgage payable, 530 (this interest is due during the next accounting period); (d) insurance expired, 175; (e) salaries accrued but not paid 370; (f) rent was collected in advance and the performance obligation is now satisfied, 800; (g) office supplies cm hand at year-end, 230 (expensed when originally purchased earlier in the year); and (h) the income tax rate is 30% on current income and is payable in the first quarter of 2020. Required: 1. Transfer the account balances to a 10-column worksheet and prepare a trial balance. 2. Prepare the adjusting entries in the general journal and complete the worksheet. 3. Prepare the companys income statement, retained earnings statement, and balance sheet. 4. Prepare closing entries in the general journal.
- Soon after December 31, 2019, the auditor requested a depreciation schedule for trucks of Jarrett Trucking Company, showing the additions, retirements, depreciation, and other data affecting the income of the company in the 4-year period 2016 to 2019, inclusive. The following data were in the Trucks account as of January 1, 2016: The Accumulated DepreciationTrucks account, previously adjusted to January 1,2016, and duly entered in the ledger, had a balance on that date of 16,460. This amount represented the straight-line depreciation on the four trucks from the respective dates of purchase, based on a 5-year life and no residual value. No debits had been made to this account prior to January 1, 2016. Transactions between January 1,2017, and December 31, 2019, and their record in the ledger were as follows: 1. July 1, 2016: Truck no. 1 was sold for 1,000 cash. The entry was a debit to Cash and a credit to Trucks, 1,000. 2. January 1, 2017: Truck no. 3 was traded for a larger one (no. 5) with a 5-year life. The agreed purchase price was 12,000. Jarrett paid the other company 1,780 cash on the transaction. The entry was a debit to Trucks, 1,780, and a credit to Cash, 1,780. 3. July 1, 2018: Truck no. 4 was damaged in a wreck to such an extent that it was sold as junk for 50 cash. Jarrett received 950 from the insurance company. The entry made by the bookkeeper was a debit to Cash, 1,000, and credits to Miscellaneous Revenue, 50, and Trucks, 950, 4. July 1, 2018: A new truck (no. 6) was acquired for 20,000 cash and debited at that amount to the Trucks account. The truck has a 5-year life. Entries for depreciation had been made at the close of each year as follows: 2016, 8,840; 2017, 5,436; 2018, 4,896; 2019, 4,356. Required: 1. Next Level For each of the 4 years, calculate separately the increase or decrease in earnings arising from the companys errors in determining or entering depreciation or in recording transactions affecting trucks. 2. Prove your work by one compound journal entry as of December 31, 2019; the adjustment of the Trucks account is to reflect the correct balances, assuming that the books have not been closed for 2019.Comprehensive: Income Statement and Supporting Schedules The following s a partial list of the account balances, after adjustments, of Silvoso Company on December 31, 2019: The following information is also available: 1. The company declared and paid a 0.60 per share cash dividend on its common stock. The stock was outstanding the entire year. 2. A physical count determined that the December 31, 2019, ending inventory is 34,100. 3. A tornado destroyed a warehouse, resulting in a pretax loss of 12,000. The last tornado in this area had occurred 10 years earlier. 4. On May 1, 2019, the company sold an unprofitable division (R). From January through April, Division R (a major component of the company) had incurred a pretax operating loss of 8,700. Division R was sold at a pretax gain of 10,000. 5. The company is subject to a 30% income tax rate. Its income tax expense for 2019 totals 4,230. The breakdown is as follows: 6. The company had average shareholders equity of 150,000 during 2019. Required: 1. As supporting documents for Requirement 2, prepare separate supporting schedules for cost of goods sold, selling expenses, general and administrative expenses, and depreciation expense. 2. Prepare a 2019 multiple-step income statement for Silvoso. Include any related note to the financial statements. 3. Prepare a 2019 retained earnings statement. 4. Next Level What was Silvosos return on common equity for 2019? What is your evaluation of Silvosos return on common equity if last year it was 10%?While examining the accounts of Company on December 31, 2020, the following errors were uncovererd: Dividends of P100,000 had been declared on December 31, 2020 but was not recorded in the books. Improvements in Buildings and equipment for P480,000 had been debited to expense at the end of April in 2019. Improvements are estimated to have estimated life of 8 years. The company failed to record sales commissions payable amounting to P10,500 and P19,000 at the end of 2019 and 2020, respectively Supplies on hand amounting to P6,000 and P15,000 were not recognized at the end of 2019 and 2020, respectively. What is the net effect of the above errors in the 2019 net income? A.P435,500 understated B.P475,500 understated C.P463,500 understated D.P423,500 understated