While examining the December 31, 2022 financial statements of Lark Company, a new client, you discover the following: Inventory at January 1, 2022, had been overstated by P 30,000. Inventory at December 31, 2022 was understated by P 50,000. A three year insurance policy had been purchased on January 2, 2021, for P 15,000. The entire amount was charged as an expense in 2021. During 2022, Bukidnon received a P 10,000 cash advance from a customer for merchandise to be manufactured and shipped during 2023. The 10,000 was credited to Sales Revenue. Bukidnon's gross profit on sales is 50%. Net income reported on the 2022 income statement (before reflecting any adjustments for the above items) is P 215,000. QUESTION: What is the proper net income for 2022?
While examining the December 31, 2022 financial statements of Lark Company, a new client, you discover the following: Inventory at January 1, 2022, had been overstated by P 30,000. Inventory at December 31, 2022 was understated by P 50,000. A three year insurance policy had been purchased on January 2, 2021, for P 15,000. The entire amount was charged as an expense in 2021. During 2022, Bukidnon received a P 10,000 cash advance from a customer for merchandise to be manufactured and shipped during 2023. The 10,000 was credited to Sales Revenue. Bukidnon's gross profit on sales is 50%. Net income reported on the 2022 income statement (before reflecting any adjustments for the above items) is P 215,000. QUESTION: What is the proper net income for 2022?
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 10P: At the beginning of 2020, Tanham Company discovered the following errors made in the preceding 2...
Related questions
Question
While examining the December 31, 2022 financial statements of Lark Company, a new client, you discover the following:
- Inventory at January 1, 2022, had been overstated by P 30,000.
- Inventory at December 31, 2022 was understated by P 50,000.
- A three year insurance policy had been purchased on January 2, 2021, for P 15,000. The entire amount was charged as an expense in 2021.
- During 2022, Bukidnon received a P 10,000 cash advance from a customer for merchandise to be manufactured and shipped during 2023. The 10,000 was credited to Sales Revenue. Bukidnon's gross profit on sales is 50%.
- Net income reported on the 2022 income statement (before reflecting any adjustments for the above items) is P 215,000.
QUESTION:
What is the proper net income for 2022?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Financial Accounting
Accounting
ISBN:
9781337272124
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College