Cullumber Inc. began operations on January 1, 2022. Financial statements for 2022 and 2023 contained the following errors: Dec. 31, 2022 Dec. 31, 2023 Ending inventory $32500 too high $41000 too low Depreciation 23000 too high expense Insurance expense 14000 too low 14000 too high Prepaid insurance 14000 too high In addition, on December 31, 2023 fully depreciated equipment was sold for $8600, but the sale was NOT recorded until 2024. No corrections have been made for any of the errors. Ignore income tax considerations. The total effect of the errors on Cullumber's 2023 net income is O understated by $96100. overstated by $27900. O understated by $63600. O overstated by $50900.
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- (Error Analysis) Peter Henning Tool Company's December 31 year-end financial statements contained the following errors. December 31, 2020 December 31, 2021 Ending inventory $9,600 understated $8,100 overstated Depreciation expense $2,300 understated — An insurance premium of $66,000 was prepaid in 2020 covering the years 2020, 2021, and 2022. The entire amount was charged to expense in 2020. In addition, on December 31, 2021, fully depreciated machinery was sold for $15,000 cash, but the entry was not recorded until 2022. There were no other errors during 2020 or 2021, and no corrections have been made for any of the errors. (Ignore income tax considerations.) Instructions a. Compute the total effect of the errors on 2021 net income. b. Compute the total effect of the errors on the amount of Henning's working capital at December 31, 2021. c. Compute the total effect of the errors on the balance of Henning's retained earnings at…Aljohn Company's year-end financial statements contained the following errors: 12.31.2021 12.31.2022 Ending inventory P95,000 understated P800,000 overstated Depreciation P250,000 understated An insurance premium of P600,000 was prepaid in 2021 covering the years 2021, 2022, and 2023. The entire amount was charged to expense in 2021. In addition, on December 31, 2022, fully depreciated machinery was sold for P150,000 cash, but the entry was not recorded until 2022. No corrections have been made for any of the errors. Ignore income tax. What was the total effect of the errors on retained earnings on December 31, 2022?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?
- The 2022 and 2023 financial statements of Marigold Inc. contained the following errors: Ending Inventory Insurance Expense O 2022 $24840 understated $13640 overstated $13640 understated $30040 understated $10400 overstated 5200 understated 2023 $16640 understated Assuming that none of the errors were detected or corrected, by what amount will 2023 income before taxes be overstated or understated? 3000 overstated(Error Analysis) Peter Henning Tool Company’s December 31 year-end financial statements contained the following errors. December 31, 2017 December 31, 2018 Ending inventory $9,600 understated $8,100 overstated Depreciation expense $2,300 understated — An insurance premium of $66,000 was prepaid in 2017 covering the years 2017, 2018, and 2019. The entire amount was charged to expense in 2017. In addition, on December 31, 2018, fully depreciated machinery was sold for $15,000 cash, but the entry was not recorded until 2019. There were no other errors during 2017 or 2018, and no corrections have been made for any of the errors. (Ignore income tax considerations.)Instructions(a) Compute the total effect of the errors on 2018 net income.(b) Compute the total effect of the errors on the amount of Henning’s working capital at December 31, 2018.(c) Compute the total effect of the errors on the balance of Henning’s retained earnings at December 31, 2018.Teal Tool Company's December 31 year-end financial statements contained the following errors. Ending inventory Depreciation expense December 31, 2020 $10,500 understated $2,400 understated Total effect of errors on net income $ An insurance premium of $69,000 was prepaid in 2020 covering the years 2020, 2021, and 2022. The entire amount was charged to expense in 2020. In addition, on December 31, 2021, fully depreciated machinery was sold for $16,000 cash, but the entry was not recorded until 2022. There were no other errors during 2020 or 2021, and no corrections have been made for any of the errors. (Ignore income tax considerations.) (a) Compute the total effect of the errors on 2021 net income. Total effect on working capital $ December 31, 2021 understated overstated (b) Compute the total effect of the errors on the amount of Teal's working capital at December 31, 2021. $8,200 overstated Total effect on retained earnings (c) Compute the total effect of the errors on the balance of…
- Sheridan Tool Company’s December 31 year-end financial statements contained the following errors. December 31, 2020 December 31, 2021 Ending inventory $9,600 understated $7,600 overstated Depreciation expense $2,100 understated — An insurance premium of $62,100 was prepaid in 2020 covering the years 2020, 2021, and 2022. The entire amount was charged to expense in 2020. In addition, on December 31, 2021, fully depreciated machinery was sold for $16,300 cash, but the entry was not recorded until 2022. There were no other errors during 2020 or 2021, and no corrections have been made for any of the errors. (Ignore income tax considerations.)(a) Compute the total effect of the errors on 2021 net income. Total effect of errors on net income $Enter the total effect of errors on net income in dollars (b) Compute the total effect of the errors on the amount of Sheridan’s working capital…Wildhorse Tool Corporation's December 31 year-end financial statements contained the following errors: December 31, 2022 December 31, 2023 Ending inventory $10,900 overstated $10,200 understated Depreciation expense $3,500 overstated An insurance premium of $50,400 covering the years 2022, 2023, and 2024 was prepaid in 2022, with the entire amount charged to expense that year. In addition, on December 31, 2023, fully depreciated machinery was sold for $15,400 cash, but the entry was not recorded until 2024. There were no other errors during 2022 or 2023, and no corrections have been made for any of the errors. Wildhorse follows ASPE. Answer the following, ignoring income tax considerations. (a) Calculate the total effect of the errors on 2023 net income. Effect of errors on 2023 net income: $The 2022 and 2023 financial statements of Martinez Inc. contained the following errors: Ending Inventory Insurance Expense 2022 $15400 overstated $5200 overstated $15400 understated $5200 understated $10300 overstated 5100 understated 2023 $16480 understated 2900 overstated Assuming that none of the errors were detected or corrected, by what amount will 2022 income before taxes be overstated or understated?
- Peter Henning Tool Company's December 31 year-end financial statements contained the following errors. December 31, 2020 December 31, 2021 Ending inventory $9,600 understated $8,100 overstated Depreciation expense $2,300 understated — An insurance premium of $66,000 was prepaid in 2020 covering the years 2020, 2021, and 2022. The entire amount was charged to expense in 2020. In addition, on December 31, 2021, fully depreciated machinery was sold for $15,000 cash, but the entry was not recorded until 2022. There were no other errors during 2020 or 2021, and no corrections have been made for any of the errors. (Ignore income tax considerations.) Instructions a. Compute the total effect of the errors on 2021 net income. b. Compute the total effect of the errors on the amount of Henning's working capital at December 31, 2021. c. Compute the total effect of the errors on the balance of Henning's retained earnings at December 31, 2021.Buffalo Tool Company’s December 31 year-end financial statements contained the following errors. December 31, 2020 December 31, 2021 Ending inventory $9,100 understated $7,800 overstated Depreciation expense $2,300 understated — An insurance premium of $67,200 was prepaid in 2020 covering the years 2020, 2021, and 2022. The entire amount was charged to expense in 2020. In addition, on December 31, 2021, fully depreciated machinery was sold for $13,700 cash, but the entry was not recorded until 2022. There were no other errors during 2020 or 2021, and no corrections have been made for any of the errors. (Ignore income tax considerations.)(a) Compute the total effect of the errors on 2021 net income. Total effect of errors on net income $Enter the total effect of errors on net income in dollars (b) Compute the total effect of the errors on the amount of Buffalo’s working capital at…XYZ Corp. is a calendar-year corporation whose financial statements for 2019 and 2020 included errors as follows: Ending Inventory. Year Depreciation Expense 2019 30,000 overstated $36,000 overstated O a. $4,000 decrease O b. $32,000 increase 12,000 understated Time left 2:51:11 $ 2020 10,000 understated Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2019 or December 31, 2020. Ignoring income taxes, by how much should XYZ's retained earnings be retrospectively adjusted at January 1, 2021?