Bacolod Co. reported the following Net Income: 650,000 500,000 300,000 The following are the misstatements discovered in 2019. 2016 2017 2018 2016 Inventory Overstated 2017 Inventory Understated 2018 Inventory Overstated 13,000 35,000 35,000 5,000 8,000 2017 Accrued Salaries Understated 2017 Interest Income Understated Advanced Rent Payments for 2019 recorded in 2018 as rent expense Depreciation per year of machinery acquired 17,000 25,000 in 2016. Amount was not recorded since the machine was omitted in the books of the company. Payment for Insurance in 2016 covering 4- year period Fully Depreciated Equipment Sold 2018 but recorded in 2019 was fully expensed in 2016 in 80,000 19,000

Bacolod Co. reported the following Net Income: 650,000 500,000 300,000 The following are the misstatements discovered in 2019. 2016 2017 2018 2016 Inventory Overstated 2017 Inventory Understated 2018 Inventory Overstated 13,000 35,000 35,000 5,000 8,000 2017 Accrued Salaries Understated 2017 Interest Income Understated Advanced Rent Payments for 2019 recorded in 2018 as rent expense Depreciation per year of machinery acquired 17,000 25,000 in 2016. Amount was not recorded since the machine was omitted in the books of the company. Payment for Insurance in 2016 covering 4- year period Fully Depreciated Equipment Sold 2018 but recorded in 2019 was fully expensed in 2016 in 80,000 19,000

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 39BE

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Noren Company uses the balance sheet aging method to account for uncollectible debt on receivables. The following is the past-due category information for outstanding receivable debt for 2019. To manage earnings more favorably, Noren Company considers changing the past-due categories as follows. A. Complete each table by filling in the blanks. B. Determine the difference between totals uncollectible. C. Complete the following 2019 comparative income statements for 2019, showing net income changes as a result of the changes to the balance sheet aging method categories. D. Describe the categories change effect on net income and accounts receivable.
Elegant Linens uses the balance sheet aging method to account for uncollectible debt on receivables. The following is the past-due category information for outstanding receivable debt for 2019. To manage earnings more favorably, Elegant Linens considers changing the past-due categories as follows. A. Complete each table by filling in the blanks. B. Determine the difference between total uncollectible. C. Complete the following 2019 comparative income statements for 2019, showing net income changes as a result of the changes to the balance sheet aging method categories. D. Describe the categories change effect on net income and accounts receivable.
Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020. Prepare Hellers partial income statements (through gross profit) for 2019 and 2020. RE22-2 Heller Company began operations in 2019 and used the LIFO method to compute its 300,000 cost of goods sold for that year. At the beginning of 2020, Heller changed to the FIFO method. Heller determined that its cost of goods sold under FIFO would have been 250,000 in 2019. For 2020, Hellers cost of goods sold under FIFO was 360,000, while it would have been 410,000 under LIFO. Heller is subject to a 21% income tax rate. Compute the cumulative effect of the retrospective adjustment on prior years income (net of taxes) that Heller would report on its retained earnings statement for 2020.
The following items were included in Venicio Corporations inventory account on December 31, 2019: What amount should Venicio report as inventory at December 31, 2019? a. 21,000 b. 20,400 c. 26,000 d. 35,000
Roxas Company reported the following net income: 2018 - P1,750,000 2019 - P2,000,000 An examination of the accounting records for the year ended December 31, 2019 revealed that several errors were made. The following errors were discovered: • The footings and extensions showed that the inventory on December 31, 2018 was overstated by P190,000. • Prepaid insurance of P120,000 applicable to 2020 was expensed in 2019. • Interest receivable of P20,000 was not recorded on December 31, 2019. . On January 1, 2019, an equipment costing P400,000 was sold for P220,000. At the date of sale, the equipment had accumulated depreciation of P240,000. • The cash received was recorded as miscellaneous income in 2019. . In addition, depreciation was recorded for the equipment for 2019 at the rate of 10%. Required: 1. Prepare worksheet showing corrected net income for 2018 and 2019. 2. Prepare adjusting entries on December 31, 2019 assuming (a) books are still open and (b) books are already closed.
Sunflower Co. reported net income of P150,000, P180,000, and P220,000 for the years 2017, 2018, and 2019. However, the following errors were detected and were not yet corrected:· 2017 ending inventory is overstated by P6000.· 2018 beginning inventory is overstated by P6000.· A prepayment for rent for three years amounting to P9000 was expensed in full in 2018.How much is the correct 2019 net income?
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Liberty Corporation reported the following financial statements: Liberty’s inventory turnover during 2019 was (amounts rounded) a. 6 times. b. 7 times. c 8 times. d. not determinable from the data
The following information is from the accounts of Neway Ltd for the years 2018 and 2019 Neway Ltd Summary of the statement of comprehensive income 2019 2018 $m $m Sales revenue 650 615 COGS 305 295 Gross profit Interest expense Other expenses (including depreciation) Profit 320 (13) (100) 345 (15) (120) 210 207 63 Depreciation expense Accounts payable at the end of the period Accounts receivable at the end of the period |Inventory held at the end of the period 85 30 25 34 46 65 57 Required: a) Prepare a statement of cash flows from operations for Neway Ltd. b) Prepare a statement that reconciles the profit with the cash flows from operations.
The following balances were reported by ABC Co. at December 31, 2019 and 2020: Inventory Account payable 12/31/20 P2,600,000 750,000 12/31/19 P2,900,000 500,000 ABC Co. paid suppliers P4, 900,000 during 2019. How much is the cost of goods sold in 2019? How much is the cost of goods sold in 2019?
During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts:2019 understated by $120,0002020 overstated by 150,000WMC uses the periodic inventory system and the FIFO cost method.Required:1. Determine the effect of these errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.)2. Prepare a journal entry to correct the error in 2021.3. Will WMC account for the error (a) retrospectively or (b) prospectively?
Bonghill Company’s December 31 year-end financial statements had the following error: December 31, 2019 December 31, 2020 Ending Inventory 13,500 understated 19,800 overstated Depreciation expense 3,600 understated - Unearned rental 5,000 understated - Prepaid insurance - 8,000 understated There were no other errors during the years 2019 or 2020 and no corrections have been made for any of the errors. (Ignore income tax considerations) What is the net effect of the errors in Bonghill’s December 31, 2020 accumulated profits balance?