You have been engaged to examine the books and other records of Golden HarvestCorporation, which started its operations in 2020. Your examination disclosed thefollowing information:(1) Reported profit (loss) for the year:202020212022P(250,000)320,000380,000(2) The company during the three-year period failed to recognize accruals anddeferrals at yearend. The amounts omitted were as follows:Accrued expensesAccrued incomePrepaid expensesUnearned income2020P20,00032,00012,00015,0002021P25,00030,00018,00010,0002022P30,00026,00024,0008,000(3) Goods which were in transit at yearend were omitted from the physical count.These goods had been property recorded as purchases during the year:P28,00064,000End of 2021End of 2022(4) The company purchased a machine costing P80,000 on August 31, 2020.The amount was recorded as expense. The company depreciates all itsproperty, plant and equipment using the straight-line method, rounded tothe nearest month and disregarding residual values. This equipment had anestimated useful life of 8 years.(5) Dividends dedared at the end of 2021 and 2022 amounting to P60,000 andP100,000 respectively were recorded when paid in 2022 and 2023,respectively.(6) The Retained Eamings account is reproduced overleaf:Retained Earnings202020212022P(100,000)January 1 BalanceShare PremiumGain on Redemption of PreferenceSharesGain on Sale of Treasury Shares -OrdinaryDividends PaidProfit (loss) for the yearBalances, December 31P300,000P150,00030,00080,000(250,000)P(100,000)320,000P300,000(60,000)380,000P650,000REQUIRED:(a) Compute1.the correct profit (loss) for the years 2020, 2021 and 20222.the correct retained earnings balance at December 31, 2020,2021 and 2022.(b) Prepare audit adjusting entries in 2022.Scanned with CamScanner

Adjustment Entries The purpose of providing the adjustment entry in to make more viable financial…

REQUIRED: (a) Compute 1. the correct profit (loss) for the years 2020, 2021 and 2022 the correct retained earnings balance at December 31, 2020, 2021 and 2022. 2. (b) Prepare audit adjusting entries in 2022.

REQUIRED: (a) Compute 1. the correct profit (loss) for the years 2020, 2021 and 2022 the correct retained earnings balance at December 31, 2020, 2021 and 2022. 2. (b) Prepare audit adjusting entries in 2022.

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

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 10MC: Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended...

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Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800
The following information is from Amos Company for the year ended December 31, 2019. Prepare a statement of retained earnings for Amos Company. ∙ Retained earnings at December 31, 2018 (before discovery of error), $1,375,000. ∙ Cash dividends declared and paid during the year, $43,000. ∙ Two years ago, it forgot to record depreciation expense of $55,500 (net of tax benefit). ∙ The company earned $126,000 in net income this year.
The following information was taken from the records of Tamarisk Inc. for the year 2020: Income tax applicable to income from continuing operations $205,700: income tax applicable to loss on discontinued operations $28.050, and unrealized holding gain on available-for-sale securities (net of tax) $16,500. Gain on sale of equipment Loss on discontinued operations Administrative expenses Rent revenue Loss on write-down of Inventory $104,500 (a) 82,500 264.000 44,000 66,000 Shares outstanding during 2020 were 100,000. Cash dividends declared Retained earnings January 1, 2020 Cost of goods sold Selling expenses Sales Revenue $165,000 2.280,000 TAMARISK INC. 935,000 330,000 2,090,000 Prepare a single-step income statement (with respect to items in Income from operations). (Round earnings per share to 2 decimal places, e.g. 1.48.)
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Dex Lukes at December 31, 2020, the end of its first year of operations has the following details: Sales revenue P317,050 Cost of goods sold 144,760 Selling and administrative expenses 49,700 Gain on sale of plant assets 28,090 Unrealized gain on available-for-sale debt investments 9,890 Interest expense P6,250 Loss on discontinued operations P12,880 Dividends declared and paid P4,760 Compute the following: (a) Income from operations (b) Net income (C) Comprehensive income
The following information was taken from the records of Blue Inc. for the year 2025: Income tax applicable to income from continuing operations $228,140, income tax applicable to loss on discontinued operations $31,110, and unrealized holding gain on available-for- sale debt securities (net of tax) $18,300. Gain on sale of equipment Loss on discontinued operations Administrative expenses Rent revenue Loss on write-down of inventory Revenues Sales Revenue Rent Revenue Shares outstanding during 2025 were 100,000. Total Revenues Expenses Cost of Goods Sold Selling Expenses Administrative Expenses Prepare a single-step income statement (with respect to items in Income from operations). (Round earnings per share to 2 decimal places, e.g. 1.48. Enter other revenue and gains before other expenses and losses) Total Expenses Income from Operations Other Revenues and Gains Gain on Sale of Equipment Other Expenses and Losses Inventory Loss Income before Income Tax Income Tax Income from…
During an audit of Madison Company’s December 31, 2020 records it was discovered that the company did not accurately accrue for $12,500 of depreciation expense. The accrual of interest expense of $4,500 was also omitted. These errors occurred in 2019 and have a material impact on Madison’s financial records. Madison’s net income for the year was $123,000. The company is subject to a 35% tax rate. The company had a retained earnings balance of $557,500 on January 1, 2020. No dividends were paid. Required: 1. Prepare the necessary journal entries to correct the accounting records of Madison Company’s books. 2. Prepare the statement of retained earnings for 2020. 1. Prepare the necessary journal entries to correct the accounting records of Madison Company’s books. For grading purposes, prepare four separate entries dated December 31. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2…
During an audit of Madison Company’s December 31, 2020 records it was discovered that the company did not accurately accrue for $12,500 of depreciation expense. The accrual of interest expense of $4,500 was also omitted. These errors occurred in 2019 and have a material impact on Madison’s financial records. Madison’s net income for the year was $123,000. The company is subject to a 35% tax rate. The company had a retained earnings balance of $557,500 on January 1, 2020. No dividends were paid. Required: 1. Prepare the necessary journal entries to correct the accounting records of Madison Company’s books. For grading purposes, prepare four separate entries dated December 31. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 8
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Bananas, Inc. is a calendar-year corporation. Its financial statements for the years ended December 31, 2019 and 2020 contained the following errors: Ending Inventory Depreciation expense 2019 $25,000 overstatement 10,000 understatement 2020 $40,000 understatement 20,000 overstatement Assume that no correcting entries were made in 2019 or 2020 and that no errors existed in 2018. Ignoring income taxes, by how much will retained earnings at December 31, 2020 be overstated or understated? Enter an overstatement as a positive number and an understatement as a negative number.