Your examination of the financial statements of Water Corporation revealed the following errors were made in the preparation of the 2017 financial statements: a. The depreciation expense in 2017 was recorded as P100,000, instead of P10,000 b. Sales made in December 2017 for P150,000 were recorded in January 2018 c. Rent paid on April 30, 2017, covering a one-year period was recognized as expense in 2017. Unexpired portion of P40,000 was not recorded at year-end d. Advances from customers amounting to P25,000 were recognized as sales in 2017. The goods were shipped in 2018. e. Salaries totaling to P50,000 was not recorded at year-end. The expense was recorded upon payment in 2018. f. Collections of accounts receivable in 2017 amounting to P20,000 were recorded in 2018. g. The unadjusted net income for 2017 is P650,000

Your examination of the financial statements of Water Corporation revealed the following errors were made in the preparation of the 2017 financial statements: a. The depreciation expense in 2017 was recorded as P100,000, instead of P10,000 b. Sales made in December 2017 for P150,000 were recorded in January 2018 c. Rent paid on April 30, 2017, covering a one-year period was recognized as expense in 2017. Unexpired portion of P40,000 was not recorded at year-end d. Advances from customers amounting to P25,000 were recognized as sales in 2017. The goods were shipped in 2018. e. Salaries totaling to P50,000 was not recorded at year-end. The expense was recorded upon payment in 2018. f. Collections of accounts receivable in 2017 amounting to P20,000 were recorded in 2018. g. The unadjusted net income for 2017 is P650,000

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 11P: A review of Anderson Corporations books indicates that the errors and omissions pertaining to the...

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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 9,800
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.
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.
Your examination of the financial statements of water Corporation revealed the following errors were made in the preparation of the 2017 financial statements: a. The depreciation expense in 2017 was recorded as P100,000, instead of P10,000b. Sales made in December 2017 for P150,000 were recorded in January 2018c. Rent paid on April 30, 2017 covering a one-year period was recognized as expense in 2017. Unexpired portion of P40,000 was not recorded at year-endd. Advances from customers amounting to P25,000 were recognized as sales in 2017. The goods were shipped in 2018.e. Salaries totaling to P50,000 was not recorded at year-end. The expense was recorded upon payment in 2018.f. Collections of accounts receivable in 2017 amounting to P20,000 were recorded in 2018.g. The unadjusted net income for 2017 is P650,000 Required: What is the net effect of the errors in the working capital at the end of 2017 and 2018?
Your examination of the financial statements of Chan Corporation revealed the following errors were made in the preparation of the 2017 financial statements: a. The depreciation expense in 2017 was recorded as P100,000, instead of P10,000b. Sales made in December 2017 for P150,000 were recorded in January 2018c. Rent paid on April 30, 2017 covering a one-year period was recognized as expense in 2017. Unexpired portion of P40,000 was not recordedat year-endd. Advances from customers amounting to P25,000 were recognized as sales in 2017. The goods were shipped in 2018.e. Salaries totaling to P50,000 was not recorded at year-end. The expense was recorded upon payment in 2018.f. Collections of accounts receivable in 2017 amounting to P20,000 were recorded in 2018.g. The unadjusted net income for 2017 is P650,000 Required: What is the net effect of the errors in the working capital at the end of 2017 and 2018? (TABULATE YOUR ANSWERS AND SHOW THE VALUES)
The net income for 2018 reported by the accountant of OH MAH GAHD Company amounted to P634,500. Your audit of the accounts disclosed that the following accounts were not properly accounted: 2017 2018 Rent received in advance 22,500 30,000 Accrued salaries 13,500 18,000 Prepaid interest 33,750 45,000 Commission receivable 15,750 14,625 Depreciation expense 26,250 26,250 Equipment purchased at the beginning of the year charged to expense (10 year life) 75,00010. What is the pre-tax net effect of the above errors on retained earnings on December 31, 2018? A. 3,375 understated B. 3,375 overstated C. 19,125 understated D. 19,125 overstated
The comparative balance sheet of Del Ray Enterprises Inc. at December 31, 2016 and 2015, is as follows: Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2016 are as follows:a. Net income, $332,000b. Depreciation reported on the income statement, $83,400c. Equipment was purchased at a cost of $162,800 and fully depreciated equipment costing $44,800 was discarded, with no salvage realized.d. The mortgage note payable was not due until 2018 but the terms permitted earlier payment without penalty.e. 10,000 shares of common stock were issued at $20 for cash.f. Cash dividends declared and paid, $153,600InstructionsPrepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities
Bridgeport Co. reported before-tax income of $427,000 in 2017 and $323,000 for 2018. However, the company’s new controller found that the following errors had been made: 1. Sales for 2018 included $21,800 which had been received in cash during 2018, but for which the related products were delivered and title passed to the purchaser in 2017. 2. Inventory on December 31, 2017, was overstated by $6,600. 3. Ordinary repairs to equipment in the amount of $19,500 were erroneously charged to the Equipment account during 2017. The company recorded a full year of depreciation on this amount in 2017 and 2018 on a straight-line basis assuming a 10-year life. 4. The bookkeeper in recording interest expense for both 2017 and 2018 on bonds payable made the following entry on an annual basis. Interest Expense 25,300 Cash 25,300 The bonds have a face value of $253,000 and pay a stated interest rate of 10%. They were issued at a premium of $9,840 on…
Use the following information for the next three (3) questions: Silhouette Corporation reported profit for the year 2014 and 2015 at P550,000 and P700,000, respectively. Your audit of the company’s account disclosed the need for adjustments as follows: 2014 2015 Overstatement of ending inventory due to error in pricing 29,000 33,000 Omission of depreciation on newly-acquired equipment 15,000 15,000 Understatement of commission receivable 22,000 18,000 A purchase of merchandise was not recorded until the following year, and also was not included in the ending inventory 60,000 33) The adjusted profit for 2015 was 34) What is the effect of the foregoing errors (overstatement) on total assets at December 31, 2015? 35) What is the effect on the foregoing errors on retained earnings at December 31, 2014?
Cheffing Corp. has estimated that total depreciation expense for the year ending December 31, 2017 will amount to $880,000. In Cheffing's interim income statement for the three months ended March 31, 2017, what is the total amount of expense relating to this item that should be reported? $880,000 $0 $440,000 $220,000
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: 1. Next Level For eacl1 of the 4 years, calculate separately the increase or decrease in earnings arising from the company’s 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.
Morlan Corporation is preparing its December 31, 2017, financial statements. Two events that occurred between December 31, 2017, and March 10, 2018, when the statements were authorized for issue, are described below.1. A liability, estimated at $160,000 at December 31, 2017, was settled on February 26, 2018, at $170,000.2. A flood loss of $80,000 occurred on March 1, 2018.InstructionsWhat effect do these subsequent events have on 2017 net income?