Effects of Errors on Financial Statements The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($18,340) and (b) accrued wages ($5,140). If the net income for the current year had been $354,500, what would have been the correct net income if the proper adjusting entries had been made?
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Effects of Errors on Financial Statements
The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted
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- Effects of Errors on Financial Statements The accountant for Healthy Life Company, a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($27,780) and (b) accrued wages ($7,780). If the net income for the current year had been $537,000, what would have been the correct net income if the proper adjusting entries had been made?$fill in the blankAbrat 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.Effects of errors on financial statementsThe accountant for Healthy Life Company, a medical services consultingfirm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($34,900) and (b) accrued wages ($12,770).Indicate the effect of each error, considered individually, on the incomestatement for the current year ended July 31. Also indicate the effect of each error on the July 31 balance sheet. Set up a table similar to thefollowing, and record your answers by inserting the dollar amount in theappropriate spaces. Insert a zero if the error does not affect the item.
- your client, failed to record accrued salaries expense of P 50,000 as of December 31, 2022. Based on the foregoing, answer the following questions: Question 1: Which of the following accounts is(are) understated by P 50,000 at the end of year 2022 as a result of the error? Question 2: Which of the following accounts is(are) overstated by P 50,000 at the end of year 2023 as a result of the error? Question 3: What would be the adjusting entry if the error is discovered in year 2022? Question 4: What would be the adjusting entry if the error is discovered in year 2023? Question 5: What would be the adjusting entry if the error is discovered in year 2024?Milan Company reported pretax income of P 6,500,000 on December 31, 2021. During your audit, the following errors were revealed: Insurance premium covering the period from July 1, 2021 to July 1, 2022, amounting to P 200,000 was paid and recorded as expense on July 31, 2021. The client did not make any adjustment at year end. Advertising for December 2021, amounting to P 500,000, was recorded when payment was made in January 2022. Merchandise worth P 1,000,000 was purchased in 2021 and included in ending inventory. However, the purchase was recorded only in 2022. On November 1, 2021, the P 300,000 was received representing rent of an equipment applicable for six months. Upon receipt, the entire amount was credited to income account. A merchandise valued at P 1,500,000 was properly recorded as purchase at year-end. Since the merchandise was still at the port area, it was inadvertently omitted from the inventory on December 31, 2021. What is the corrected pretax income for the year…Milan Company reported pretax income of P 6,500,000 on December 31, 2021. During your audit, the following errors were revealed: Insurance premium covering the period from July 1, 2021 to July 1, 2022, amounting to P 200,000 was paid and recorded as expense on July 31, 2021. The client did not make any adjustment at year end. Advertising for December 2021, amounting to P 500,000, was recorded when payment was made in January 2022. Merchandise worth P 1,000,000 was purchased in 2021 and included in ending inventory. However, the purchase was recorded only in 2022. On November 1, 2021, the P 300,000 was received representing rent of an equipment applicable for six months. Upon receipt, the entire amount was credited to income account. A merchandise valued at P 1,500,000 was properly recorded as purchase at year-end. Since the merchandise was still at the port area, it was inadvertently omitted from the inventory on December 31, 2021. What is the corrected pretax income for the year…
- Ray Company, your client, failed to record accrued rent income of P 25,000 as of December 31, 2022. Based on the foregoing, answer the following questions: Question 1: Which of the following accounts is(are) understated by P 25,000 at the end of year 2022 as a result of the error? Question 2: Which of the following accounts is(are) overstated by P 25,000 at the end of year 2023 as a result of the error? Question 3: What would be the adjusting entry if the error is discovered in year 2022? Question 4: What would be the adjusting entry if the error is discovered in year 2023? Question 5: What would be the adjusting entry if the error is discovered in year 2024?Effects of Errors on Financial Statements The accountant for Healthy Medical Co., a medical services consulting firm, mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($24,070) and (b) accrued wages ($5,480). Indicate the effect of each error, considered individually, on the income statement for the current year ended August 31. Also indicate the effect of each error on the August 31 balance sheet. Enter all amounts as positive numbers. Enter "0" in those spaces where there is no overstatement or no understatement. Error (a) The adjusting entry for unearned revenue earned during the year ($24,070) was omitted. Overstated Understated 1. Revenue for the year would be $fill in the blank 1 $fill in the blank 2 2. Expenses for the year would be $fill in the blank 3 $fill in the blank 4 3. Net income for the year would be $fill in the blank 5 $fill in the blank 6 4. Assets at August 31 would be $fill in the blank 7 $fill in the blank 8 5.…Accounting Lindy Company's auditor discovered several errors. No errors were corrected during 2020. The errors are described as follows: A 3-year insurance policy purchased on Oct 31, 2020, in the amount of $18,000.00 was debited to Prepaid Insurance. No adjustment was made on December 31, 2020, or on December 31, 2021. Prepare appropriate journal entries to correct the error, and any adjusting entries required (assume the 2021 books have not been closed). Ignore income taxes. (If no entry is required for a transaction/event, select "No journal entry required.") a)identify the J/E made error b) Identify the J/E that should have been made c) Provide the correcting J/E to fix the error d)year end adjusting entry
- Prepare the adjusting journal entries to record the credit losses for the following independent situations. Required: (Explanation for the journal entry is NOT required.) a. The Allowance for Impairment has a S1,500 credit balance prior to adjustment. Net credit sales during the year are $425,000 and 4% are estimated to be uncollectible. Assume the income statement approach is used. b. The Allowance for Impairment has a $300 debit balance prior to adjustment. Based on an aging schedule of accounts receivable prepared on December 31, $18,100 of accounts receivable are estimated to be uncollectible. Assume the statement of financial position approach is used. c. Explain how the transaction in (b) affects the accounting equation.if mistakenly omitted adjusting entries for (a) unearned revenue earned during the year ($34,900) and (b) accrued wages ($12,770). What is the effect of each error, considered individually, on the income statement for the current year ended July 31.At the end of the current year, using the aging of receivable method, management estimated that $15,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $375. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?