Items 6 and 7 are based on the following information:The Beatles Manufacturing Company began operations on January 1, 2017. Financialstatements for the years ended December 31, 2017 and 2018, contained thefollowing errors:2017P16,000 understated6,000 understated10,000 overstated10,000 understated2018P15,000 overstatedEnding inventoryDepreciation expenseInsurance expense10,000 understatedPrepaid insurance In addition, on December 31, 2018, fully depreciated machinery was sold for P10,800cash, but the sale was not recorded until 2019. There were no other errors during2017 or 2018 and no corrections have been made for any of the errors.6. Ignoring income taxes, what is the total effect of the errors on 2018 profit?A. P30,200 overstated.B. P11,000 overstated.C. P 5,800 overstated.D. P 1,800 understated.7. Ignoring income taxes, what is the total effect of the errors on the amount ofworking capital at December 31, 2018?A. P4,200 overstated.B. P5,800 understated.C. P6,000 understated.D. P9,800 understated.

Name: Items 6 and 7 are based on the following information:The Beatles Manu
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Description: Items 6 and 7 are based on the following information:The Beatles Manufacturing Company began operations on January 1, 2017. Financialstatements for the years ended December 31, 2017 and 2018, contained thefollowing errors:2017P16,000 understated6,00

Overstatement: This term refers to the items of financial statements being recorded at an amount…

Business

Accounting

Items 6 and 7 are based on the following information: The Beatles Manufacturing Company began operations on January 1, 2017. Financial statements for the years ended December 31, 2017 and 2018, contained the following errors: 2017 P16,000 understated 6,000 understated 10,000 overstated 10,000 understated 2018 P15,000 overstated Ending inventory Depreciation expense Insurance expense 10,000 understated Prepaid insurance

Items 6 and 7 are based on the following information: The Beatles Manufacturing Company began operations on January 1, 2017. Financial statements for the years ended December 31, 2017 and 2018, contained the following errors: 2017 P16,000 understated 6,000 understated 10,000 overstated 10,000 understated 2018 P15,000 overstated Ending inventory Depreciation expense Insurance expense 10,000 understated Prepaid insurance

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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