At the end of Year 1, Cortex Company failed to accrue interest revenue of $3,200 that it had earned, but not received on an outstanding note receivable. Instead, it recorded the interest revenue in Year 2. Upon discovery of this error in Year 2, what correcting journal entry will Cortex Company make? Ignore income taxes.
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At the end of Year 1, Cortex Company failed to accrue interest revenue of $3,200 that it had earned, but not received on an outstanding note receivable. Instead, it recorded the interest revenue in Year 2. Upon discovery of this error in Year 2, what correcting journal entry will Cortex Company make? Ignore income taxes.
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- 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.Abrat Company failed to accrue an allowance for doubtful accounts of 13,500 in 2019. Upon discovery of this error in 2020 prior to making its estimate of doubtful accounts, what correcting journal entry should Abrat make? Ignore income taxes.At 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.
- A company is in its first year of operations and has never written off any accounts receivable as uncollectible. When the allowance method of recognizing bad debt expense is used, the entry to recognize that expense: a. increases net income b. decreases current assets c. has no effect on current assets d. has no effect on net incomeAt 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.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
- Bristax Corporation recorded $1,385,660 in credit sales for the year, and $732,410 in accounts receivable. The uncollectible percentage is 3.1% for the income statement method and 4.5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $20,550; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $17,430; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.On October 12 of the current year, a company determined that a customer's account receivable was uncollectible and that the account should be written off. Assuming the direct write-off method is used to account for bad debts, what effect will this write-off have on the company's net income and total assets? Mutiple Choice Decrease in net income; no effect on total assets. No effect on net income; no effect on total assets. Decrease in net income; decrease in total assets. Increase in net income; no effect on total assets. No effect on net income; decrease in total assetsFor the three consecutive years, the River Company failed to recognize accruals, prepayments, and other transactions inits records. Reported profits and a listing of errors appear below.2018 2019 2020 2018 2019 2020 Reported profit (loss) 490,000 670,000 (320,000) a. Failed to record accrued expenses 34,000 28,000 43,000 b. Overstated ending inventories 63,000 28,000 36,000 c. Failed to record accrued interest on notes receivable 12,000 6,000 8,000 d. Failed to recognize unearned rent 24,000 20,000 18,000 e. Failed to record purchases on account; purchases were recorded when paid in the subsequent year; merchandise properly included in ending inventory 25,000 20,000 f. Repairs and maintenance incurred during the year capitalized as part of asset cost. Full-year depreciation at an annual rate of 10% isprovided in the year that the asset is recognized 120,000 80,000 g. Failed to recognize prepaid insurance at yearend. 4,800 6,200 7,800 a. Prepare a schedule…
- One company has a debit balance of $11325 in its allowance for doubtful accounts before any adjustments are made at the end of the year. Based on review and aging of its accounts receivable at the end of the year, One company estimates that $1452 of its receivables are uncollectible. As a result it will debit Bad Debts Expense for what amount?On January 1, 2022, Amoeba Company changed its method of accounting for bad debts from the direct write-off method to the allowance method. The company's controller determined that an allowance of P 30,000 should be established on that date. Ignoring income taxes, what is the adjustment required to record the change? a. Debit - Retained Earnings, P 30,000; Credit - Allowance for Doubtful Accounts, P 30,000. b. Debit - Doubtful Accounts Expense, P 30,000; Credit - Allowance for Doubtful Accounts, P 30,000. c. Debit - Doubtful Accounts Expense, P 30,000; Credit - Retained Earnings, P 30,000. d. Debit - Retained Earnings, P 30,000; Credit - Doubtful Accounts Expense, P 30,000.BLACK WIDOW Corporation failed to recognize accruals and prepayments since the inception of its business three years ago. The accruals and prepayments at the end of 2021 are as follows: Unused office supplies 25,000 Accrued utilities 52,000 Rent revenue collected in advance 87,500 Interest receivable 65,500 Accrued wages 49,100 Prepaid insurance 60,000 4What is the net effect of the above errors in the 2021 netincome? (If understated, put a negative (-) sign before thenumerical value)