Questions: 1 How much is the adjusted net income in 2021?subpart: 1.1 How much is the adjusted net income in 2022?1.2 How much is the adjusted net income (loss) in 2023? CASE 3: Misstatement in Financial Statement AuditTokyo, a CPA was engaged by Heist Corporation in 2023 to examine its books and records and proposed anyadjustments if necessary. During the audit process, Tokyo noted the following on its working paper:[1.] A physical count of inventory was made at the end of 2021 and 2022, by the audit procedures performed thefollowing were noted:Per audit (count)P705,900648,450[2.] Heist had failed to record sales commissions payable of P12,000 and P5,000 at the end of 2022 and 2023,respectively.Date12/31/202212/31/2023Date2021Jan1Dec 312022Jan 10[3.] Heist also failed to recognize supplies on hand of P3,000 and P5,000 at the end of 2022 and 2023,respectively.[4.] Improvements in machinery and equipment of P180,000 had been Machinery and equipment account at theend of April 2020. Improvements made increase the capacity of the machinery and equipment and estimatedto have 10-year life. No depreciation was recorded on these expenditure eversince.[5.] Dividends have been declared on December 30 in 2021 and 2022 but had not been entered in the booksuntil payment was made.[6.] The retained earnings account appeared as shown below:RETAINED EARNINGSItemsDebitMar6Dec 312023JanDecBalanceNet incomeDividends paidIssued shares -excess of parNet incomePer bookP725,900623,45010 Dividends paid31 Net lossP-48,00048,00085,500CreditP-510,00063,000362,000BalanceP405,000915,000867,000930,0001,292,000Page 31,244,0001,159,000

The statement of retained earnings means the undistributed part of the company's earnings. The…

Answered: Questions: 1 How much is the adjusted…

Questions: 1 How much is the adjusted net income in 2021? subpart: 1.1 How much is the adjusted net income in 2022? 1.2 How much is the adjusted net income (loss) in 2023?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter8: Inventories: Special Valuation Issues

Section: Chapter Questions

Problem 5C: Gross Profit Shelly Corporation is an importer and wholesaler. Its merchandise is purchased from...

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