HORNGREN'S FIN.+...V.1(LL)-W/ACCESS >C<
16th Edition
ISBN: 9781323169360
Author: MILLER-NOBLES
Publisher: PEARSON C
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 13, Problem 13.13SE
Analyzing the effect of prior-period adjustments
Taylor Corporation discovered in 2017 that it had incorrectly recorded in 2016 a cash payment of $50, 000 for utilities expense. The correct amount of the utilities expense was $60,000.
Requirements
1. Determine the effect of the error on the
2. How should this error be reported in the 2017 financial statements?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Analyzing the effect of prior-period adjustments
Taylor Corporation discovered in 2019 that it had incorrectly recorded in 2018 a cash payment of $70,000 for utilities expense. The correct amount of the utilities expense was $35,000.
Requirements
Determine the effect of the error on the accounting equation in 2018.
How should this error be reported in the 2019 financial statements?
Analyzing the effect of prior-period adjustments
Taylor Corporation discovered in 2019 that it had incorrectly recorded in 2018 a cash payment of $70,000 for utility expense. The correct amount of the utility expense was $35,000.
Requirements
Determine the effect of the error on the accounting equation in 2018.
How should this error be reported in the 2019 financial statements?
Based on the data given, Determine
the Net Income in 2017
You discovered the following errors in connect ion with your
examination of the financial statements of the ABC Corporat.iion:
1. Accrued interest expense of P15,000 was not recorded at the
end of 2017.
2. Accrued rent receivable of P20,000 was not recorded at the
end of 2017.
3. The company paid one-year insurance premium of P36,000
effective March 1,2017. The entire amount was debited to
expense account and no adjustment was made at the end of
2017.
4. The company leased a portion of its building for P30, 000.
The term of the lease is one year ending April 1, 2018.
Collection of rent was credited to rent revenue account. At
the end of 2017, no entry was made to take up the unearned
portion of the amount collected.
The following data were extracted from the financial statements
of ABC Corporation
2017 2018
Net income 200,000 160, 000
Working capital 180,000 260,000
RE, end of the year 200, 000 360, 000
Chapter 13 Solutions
HORNGREN'S FIN.+...V.1(LL)-W/ACCESS >C<
Ch. 13 - Prob. 1QCCh. 13 - Prob. 2QCCh. 13 - Suppose Value Home and Garden Imports issued...Ch. 13 - Prob. 4QCCh. 13 - Prob. 5QCCh. 13 - Assume that a company paid 6 per share to purchase...Ch. 13 - Prob. 7QCCh. 13 - A small stock dividend a. decreases common stock....Ch. 13 - Jackson Health Foods has 8,000 shares of 2 par...Ch. 13 - Prob. 10QC
Ch. 13 - Prob. 1RQCh. 13 - Prob. 2RQCh. 13 - How does authorized stock differ from outstanding...Ch. 13 - What are the four basic rights of stockholders?Ch. 13 - How does preferred stock differ from common stock?Ch. 13 - Prob. 6RQCh. 13 - What are the two basic sources of stockholders'...Ch. 13 - Prob. 8RQCh. 13 - If stock is issued for assets other than cash,...Ch. 13 - Prob. 10RQCh. 13 - Where and how is treasury stock reported on the...Ch. 13 - What is the effect on the accounting equation when...Ch. 13 - What are the three relevant dates involving cash...Ch. 13 - How does cumulative preferred stock differ from...Ch. 13 - What is a stock dividend?Ch. 13 - Prob. 16RQCh. 13 - What are some reasons corporations issue stock...Ch. 13 - Prob. 18RQCh. 13 - What does the statement of retained earnings...Ch. 13 - What is a prior-period adjustment?Ch. 13 - Prob. 21RQCh. 13 - What does earnings per share report, and how is it...Ch. 13 - What is the price/earnings ratio, and how is it...Ch. 13 - What does the rate of return on common stock show,...Ch. 13 - Prob. 13.1SECh. 13 - Journalizing issuance of stock- at par and at a...Ch. 13 - Journalizing issuance of stock-no-par Ashford...Ch. 13 - Journalizing issuance of stock- stated value...Ch. 13 - Journalizing issuance o f stock for assets other...Ch. 13 - Prob. 13.6SECh. 13 - Accounting for cash dividends Frenchroast Company...Ch. 13 - Dividing cash dividends between preferred and...Ch. 13 - Prob. 13.9SECh. 13 - Prob. 13.10SECh. 13 - Prob. 13.11SECh. 13 - Preparing a statement of retained earnings Tinder,...Ch. 13 - Analyzing the effect of prior-period adjustments...Ch. 13 - Prob. 13.14SECh. 13 - Prob. 13.15SECh. 13 - Prob. 13.16SECh. 13 - Prob. 13.17ECh. 13 - Prob. 13.18ECh. 13 - Journaling issuance of stock Skylar Systems...Ch. 13 - Prob. 13.20ECh. 13 - Prob. 13.21ECh. 13 - Prob. 13.22ECh. 13 - Journalizing treasury stock transactions and...Ch. 13 - Journalizing issuance of s tock and treasury stock...Ch. 13 - Computing dividends on preferred and common stock...Ch. 13 - Computing dividends on preferred and common stock...Ch. 13 - Journalizing a stock dividend and reporting...Ch. 13 - Prob. 13.28ECh. 13 - Reporting stockholders' equity after a stock split...Ch. 13 - Determining the effects of cash dividends, stock...Ch. 13 - Prob. 13.31ECh. 13 - Prob. 13.32ECh. 13 - Computing earnings per share and price/earnings...Ch. 13 - Computing rate of return on common stockholders'...Ch. 13 - Organizing a corporation and issuing stock John...Ch. 13 - Identifying sources of equity, stock issuance, and...Ch. 13 - Prob. 13.37APCh. 13 - Journalizing dividends and treasury stock...Ch. 13 - Journalizing dividend and treasury stock...Ch. 13 - Prob. 13.40APCh. 13 - Prob. 13.41BPCh. 13 - Prob. 13.42BPCh. 13 - Prob. 13.43BPCh. 13 - Journalizing dividends and treasury stock...Ch. 13 - Journalizing dividend and treasury stock...Ch. 13 - Prob. 13.46BPCh. 13 - Sources of equity and journalizing stock issuance...Ch. 13 - Prob. 13.1CTFSCCh. 13 - Prob. 13.1CTCA
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.Similar questions
- 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.arrow_forwardAt 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.arrow_forwardShannon 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 9,800arrow_forward
- Hardys Landscape Services total revenue on account for 2018 amounted to 273,205. The company, which uses the allowance method, estimates bad debts at percent of total revenue on account. Required Journalize the following selected entries: 2012 Dec. 12Record services performed on account for E. E. Morton, 245. 31Record the adjusting entry for Bad Debts Expense. 31Record the closing entry for Bad Debts Expense. 2013 Feb. 18Write off the account of E. E. Morton as uncollectible, 245. Check Figure Adjusting entry amount, 1,366.03arrow_forwardFor this example, Zion Corporation discovers the following errors in January 2017 relating to 2016 accounting transactions. The books for the 12 months ending December 31, 2016, are still open. All years prior to January 1, 2016, are closed: 1- A math mistake was made, and depreciation expense is understated by $35,000 for 2016. 2- Zion failed to recognize and accrue salaries payable of $3,000 on 12/31/16. 3- Zion shipped an order to a customer on 12/26/16 for $4,500, but did not record it on the books yet. The sale was on account and the cost of this order to Zion was $2,875. 4- Zion further notices that depreciation expense for years prior to January 1, 2016, is understated by an additional $50,000 5- Cash Payment for Furniture $77 debited to Cash account and credited to Furniture account on 12/14/16. 6- A check for a utility bill (paid with cash) for $146 was incorrectly recorded in the journal as $164 on 12/3/16. 7 -A shipment of…arrow_forward(Error Analysis) Lowell Corporation has used the accrual basis of accounting for several years. A review of the records, however, indicates that some expenses and revenues have been handled on a cash basis because of errors made by an inexperienced bookkeeper. Income statements prepared by the bookkeeper reported $29,000 net income for2016 and $37,000 net income for 2017. Further examination of the records reveals that the following items were handled improperly.1. Rent was received from a tenant in December 2016. The amount, $1,000, was recorded as revenue at that time even though the rental pertained to 2017.2. Salaries and wages payable on December 31 have been consistently omitted from the records of that date and have been entered as expenses when paid in the following year. The amounts of the accruals recorded in this manner were:December 31, 2015 $1,100December 31, 2016 1,200December 31, 2017 9403. Invoices for supplies purchased have been charged to expense accounts when…arrow_forward
- Morlan Corporation is preparing its December 31, 2017, financial statements. Two events that occurred betweenDecember 31, 2017, and March 10, 2018, when the statements were issued, 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.What effect do these subsequent events have on 2017 net income?arrow_forwardThe 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 overstatedarrow_forwardMorlan 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?arrow_forward
- In 2018, Winslow International, Inc.’s controller discovered that ending inventories for 2016 and 2017 wereoverstated by $200,000 and $500,000, respectively. Determine the effect of the errors on retained earnings atJanuary 1, 2018. (Ignore income taxes.)arrow_forwardWhen preparing adjusting entries at December 31, 2022, DC Co. discovered that sales salaries of $65,000 had not been accrued at December 31 2021. If the error is not corrected, what is the effect on the 2021 and 2022 comparative financial statements? Question 11Answer a. Salaries and Wages Expense and total liabilities are understated in 2021. Salaries and Wages Expense and total liabilities are overstated in 2022. Retained Earnings is understated in 2021 and overstated in 2022. b. Salaries and Wages Expense is overstated in 2021 and understated in 2022. Retained Earnings is overstated and total liabilities are understated in 2021 but properly stated in 2022. c. Salaries and Wages Expense is understated in 2021 and overstated in 2022. Retained Earnings is overstated and total liabilities are understated in 2021 but properly stated in 2022. d. Salaries and Wages Expense and total liabilities are understated in 2021. Salaries and Wages Expense…arrow_forwardThe net income per books of Kimberly Young Company was determined without knowledge of the errors indicated below. Year Net Incomeper Books Error in EndingInventory 2015 $49,000 Overstated $ 2,700 2016 51,060 Overstated 8,370 2017 53,170 Understated 11,680 2018 55,090 No error 2019 56,960 Understated 1,890 2020 58,850 Overstated 8,620 Prepare a worksheet to show the adjusted net income figure for each of the 6 years after taking into account the inventory errors. Net IncomePer Books OverstatementJan. 1 UnderstatementJan. 1 OverstatementDec. 31 UnderstatementDec. 31 Corrected NetIncome 2015 $49,000 $enter a dollar amount $enter a dollar amount $enter a dollar amount $enter a dollar amount $enter a dollar amount 2016 51,060 enter a dollar amount enter a dollar amount enter a dollar amount enter a…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College PubIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Accounting Changes and Error Analysis: Intermediate Accounting Chapter 22; Author: Finally Learn;https://www.youtube.com/watch?v=c2uQdN53MV4;License: Standard Youtube License