The Relief Goods Corp. reported profit before taxes of ₱370,000 for 2019 and ₱526,000 for 2020. A later audit produced the following information: The ending inventory for 2019 included 2,000 units erroneously priced at ₱5.90 per unit. The correct cost was ₱9.50 per unit. Merchandise costing ₱17,500 was shipped to the Relief Goods Corp., FOB shipping point, on December 26, 2019. The purchase was recorded in 2019, but the merchandise was excluded from the ending inventory because it was not received until January 4, 2020. On December 28, 2019, merchandise costing ₱2,900 was sold for ₱4,000 to Ayuda Co. Ayuda had asked Relief Goods to keep the merchandise for it until January 2, when it would come and pick it up. Because the merchandise was still in the store at year-end, the merchandise was included in the inventory count. The sale was recorded in December 2019. SaveMore Company sold merchandise costing ₱1,500 to Relief Goods. The purchase was made on December 29, 2019, and the merchandise was shipped on December 30. Terms were FOB shipping point. Because Relief Goods’ bookkeeper was on vacation, neither the purchase nor the receipt of goods was recorded on the books until January 2020. Questions: How much is the corrected profit before taxes for 2019? The December 31, 2019 inventory is understated by The profit before taxes for 2020 is overstated by What is the required restatement for the retained earnings balance on December 31, 2020?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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The Relief Goods Corp. reported profit before taxes of ₱370,000 for 2019 and ₱526,000 for 2020. A later audit produced the following information:

The ending inventory for 2019 included 2,000 units erroneously priced at ₱5.90 per unit. The correct cost was ₱9.50 per unit.
Merchandise costing ₱17,500 was shipped to the Relief Goods Corp., FOB shipping point, on December 26, 2019. The purchase was recorded in 2019, but the merchandise was excluded from the ending inventory because it was not received until January 4, 2020.
On December 28, 2019, merchandise costing ₱2,900 was sold for ₱4,000 to Ayuda Co. Ayuda had asked Relief Goods to keep the merchandise for it until January 2, when it would come and pick it up. Because the merchandise was still in the store at year-end, the merchandise was included in the inventory count. The sale was recorded in December 2019.
SaveMore Company sold merchandise costing ₱1,500 to Relief Goods. The purchase was made on December 29, 2019, and the merchandise was shipped on December 30. Terms were FOB shipping point. Because Relief Goods’ bookkeeper was on vacation, neither the purchase nor the receipt of goods was recorded on the books until January 2020.

Questions:

How much is the corrected profit before taxes for 2019?
The December 31, 2019 inventory is understated by
The profit before taxes for 2020 is overstated by
What is the required restatement for the retained earnings balance on December 31, 2020?

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