Answered: What is Sparkle’s corrected profit for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

The draft profit for Sparkle Ltd (Sparkle) for the year ended 31 December
2020 is £119,200. After the draft profit was calculated, the following issues
were discovered.
• The depreciation rate for cars should have been updated to 20%
straight-line at the start of the year but was calculated using 25%
straight-line basis in error. The balance on the car cost account at the
start of the year was £24,000. There were no additions or disposals of
cars in the year.
• Debts of £5,400 should have been written off as irrecoverable at the
year end, but the journal entry was not posted.
What is Sparkle’s corrected profit for the year after accounting for the above
issues?
a) £113,800
b) £118,000
c) £115,000
d) £112,600

Expert Solution

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Section 179 Deduction and Modified Accelerated Cost Recovery System (MACRS) Depreciation

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions