whats the answer in question 1? a. Po40,000You are auditing the financial statement of Pasig Company for the first fimeYou have discovered that the merchandise inventory at the endCase 5eachasn respectively. In addition, in inspecting the record of the company, youdiscovered that some items had been improperly recorded and that certainyear-end adjustments had been overlooked in 2020 and 2021.These omission and other errors for each year were summarized asfollows:em 12/31/2020P436,800129,600192,00012/31/2021Accrued SalariesAccrued Interests IncomeP390,000106,500153,900Prepaid InsuranceAdvances from Customers(Collections from customers had beenrecorded as sales but should havebeen recognized as advances fromcustomers because goods were notshipped until the following year)Machinery (Capital expenditures hadbeen records as repairs but shouldhave been charged to Machinery; thedepreciation rate is 10% per year, butdepreciation in the year of expenditureis to be recognized at 5%.)280,500235,200261,000282,000 Chapter 1: Audit Planning and Misstate mentDetermine the following as a result of your audit:1. What is the total effect of the errors on the 2020 net income?a. increased by P15,000b. decreased by P22,000c. decreased by P32,500d. increased by P11,5002. What is the total effect of the errors on the 2021 net income?a. increased by P210,050b. decreased by P205,550c. decreased by P132,500d. increased by P242,5503. What is the total effect of the errors on the balance of the company'sretained earnings at December 31, 2021?a. increased by P177,550b. decreased by P122,050c. decreased by P132,550d. increased by P171,5504. What is the total effect of the errors on the company's working capitalat December 31, 2021?a. decreased by P150,550b. decreased by P202,0002c. decreased by P302,500d. decreased by P310,1005. The necessary adjusting journal entry for the error in recording capitalexpenditures on Machinery as of December 31, 2021 would include a:a. a debit to machinery of P543,000b. a credit to retained earnings of P323,250c. a debit to depreciation expense of P13,050d. a credit to accumulated depreciation of P41,250Case 6

Auditing is a process of checking the financial statement of a company by an auditor. The auditor…

Answered: Determine the following as à 1. What is…

Determine the following as à 1. What is the total effect of the errors on the 2020 net income? a. increased by P15,000 b. decreased by P22,000 c. decreased by P32,500 d. increased by P11,500

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle

Section: Chapter Questions

Problem 26RQSC

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JYD Corporation has determined its 2019 and 2020 net income figures to be P1,150,000 and P1,100,000, respectively. In a first time audit of the company’s financial statements, you determine the following errors: Merchandise inventory was incorrectly determined: P50,000 overstatement for 2019 and P150,000 overstatement for 2020. Revenue received in advance in 2019 of P250,000 was credited to a revenue account when received . Of the total P50,000 was earned in 2019, P120,000 was earned in 2020 and the remainder will be earned in 2021. P120,000 gain on sale of plant assets in 2020 was erroneously credited to Accumulated Profits and losses. What is the corrected net income for the year 2020? A. P900,000 B. P1,240,000 C. P1,120,000 D. P1,190,000
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