53 ABC Company reported net income and retained earnings for a two – year period as follows: Net Income Retained Earnings, Ending 2020 6,000,000 6,000,000 2021 8,000,000 14,000,000 In checking the statement for the year ended December 31, 2020, the following errors are discovered: The company paid one – year insurance premium of P 240,000 effective April 1, 2020. The entire amount was debited to asset account and no adjustment was made at the end of 2020. The company leased a portion of its building for P 480,000. The term of the lease is one year ending April 30, 2021. Collection of rent was credited to unearned rent revenue account. At the end of 2020, no entry was made to take up the earned portion of the amount collected. Depreciation expense in 2020 was understated by P 12,000. Depreciation expense in 2021 was overstated by P 14,000. Bad debts expense of P 11,000 was not recorded in 2020. How much is the net adjustment to 2020 Working Capital? (indicate negative sign if overstated)
53 ABC Company reported net income and retained earnings for a two – year period as follows: Net Income Retained Earnings, Ending 2020 6,000,000 6,000,000 2021 8,000,000 14,000,000 In checking the statement for the year ended December 31, 2020, the following errors are discovered: The company paid one – year insurance premium of P 240,000 effective April 1, 2020. The entire amount was debited to asset account and no adjustment was made at the end of 2020. The company leased a portion of its building for P 480,000. The term of the lease is one year ending April 30, 2021. Collection of rent was credited to unearned rent revenue account. At the end of 2020, no entry was made to take up the earned portion of the amount collected. Depreciation expense in 2020 was understated by P 12,000. Depreciation expense in 2021 was overstated by P 14,000. Bad debts expense of P 11,000 was not recorded in 2020. How much is the net adjustment to 2020 Working Capital? (indicate negative sign if overstated)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
53
ABC Company reported net income and
Net Income Retained Earnings, Ending
2020 6,000,000 6,000,000
2021 8,000,000 14,000,000
In checking the statement for the year ended December 31, 2020, the following errors are discovered:
- The company paid one – year insurance premium of P 240,000 effective April 1, 2020. The entire amount was debited to asset account and no adjustment was made at the end of 2020.
- The company leased a portion of its building for P 480,000. The term of the lease is one year ending April 30, 2021. Collection of rent was credited to unearned rent revenue account. At the end of 2020, no entry was made to take up the earned portion of the amount collected.
Depreciation expense in 2020 was understated by P 12,000.- Depreciation expense in 2021 was overstated by P 14,000.
Bad debts expense of P 11,000 was not recorded in 2020.
How much is the net adjustment to 2020
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