Sison Company reported profts of P4,000,000 and P8,000,000 in 2021 and 2022, respectively, In 2023, the following prior period errors were discovered: The inventory on December 31, 2021 was understated by P200,000. An equipment with an acquisition cost of P1,200,000 was erroneously charged as expense in 2021, The equipment has an estimated useful life of 5 years with no residual value. Sison Company provides full year depreciation in the year of acquisition. The unadjusted balance of retained earnings are P8,800,000 and P16,800,000 as of December 31, 2021 and 2022, respectively How much is the correct retained earnings in 2022?

Sison Company reported profts of P4,000,000 and P8,000,000 in 2021 and 2022, respectively, In 2023, the following prior period errors were discovered: The inventory on December 31, 2021 was understated by P200,000. An equipment with an acquisition cost of P1,200,000 was erroneously charged as expense in 2021, The equipment has an estimated useful life of 5 years with no residual value. Sison Company provides full year depreciation in the year of acquisition. The unadjusted balance of retained earnings are P8,800,000 and P16,800,000 as of December 31, 2021 and 2022, respectively How much is the correct retained earnings 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 15E: The following are independent errors: a. In January 2019, repair costs of 9,000 were debited to the...

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During 2019, White Company determined that machinery previously depreciated over a 7-year life had a total estimated useful life of only 5 years. An accounting change was made in 2019 to reflect the change in estimate. If the change had been made in 2018, accumulated depreciation at December 31, 2018, would have been 1,600,000 instead of 1,200,000. As a result of this change, the 2019 depreciation expense was 100,000 greater than it would have been if no change were made. Ignoring income tax considerations, what is the proper amount of the adjustment to Whites January 1, 2019, balance of retained earnings? a. 0 b. 100,000 c. 280,000 d. 400,000
Sison Company reported profts of P4,000,000 and P8,000,000 in 2021 and 2022, respectively, In 2023, the following prior period errors were discovered: The inventory on December 31, 2021 was understated by P200,000. An equipment with an acquisition cost of P1,200,000 was erroneously charged as expense in 2021, The equipment has an estimated useful life of 5 years with no residual value. Sison Company provides full year depreciation in the year of acquisition. The unadjusted balance of retained earnings are P8,800,000 and P16,800,000 as of December 31, 2021 and 2022, respectively How much is the correct profit in 2021? How much is the correct profit in 2022? How much is the correct retained earnings in 2021?
In 2024, internal auditors discovered that PKE Displays, Incorporated, had debited an expense account for the $356,000 cost of equipment purchased on January 1, 2021. The equipment's life was expected to be five years with no residual value. Straight-line depreciation is used by PKE. Required: 1. Determine the cumulative effect of the error on net income over the three-year period from 2021 through 2023, and on retained earnings by the end of 2023. 2. Prepare the correcting entry, assuming the error was discovered in 2024 before the adjusting and closing entries. (Ignore income taxes.) 3. Assume instead that the equipment was disposed of in 2025 and the original error was discovered in 2026 after the 2025 financial statements were issued. Prepare the correcting entry in 2026. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the cumulative effect of the error on net income over the three-year period from 2021 through 2023, and on…
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