1. During 2014, Gambler Company discovered that the ending inventories on its financial statements were incorrect by the following amounts: 2012 P120,000 understated 2013 150,000 overstated Gambler uses the periodic system to ascertain year-end quantities that are converted to peso amounts using FIFO cost method. Prior to any adjustments for these errors and ignoring income taxes, how much would be the accumulated profits and losses of Gambler at January 1, 2014? 2. Market Corporation failed to recognize accruals and prepayments since the inception of its business three years ago. The accruals and prepayments at the end of 2014 are given below: Prepaid insurance P60,000 Accrued wages 75,000 Rent revenue collected in advance 96,000 Interest receivable 81,000 What is the net effect of the above errors in the 2014 net income?
1. During 2014, Gambler Company discovered that the ending inventories on its financial
statements were incorrect by the following amounts:
2012 P120,000 understated
2013 150,000 overstated
Gambler uses the periodic system to ascertain year-end quantities that are converted to peso
amounts using FIFO cost method.
Prior to any adjustments for these errors and ignoring income taxes, how much would be the
2. Market Corporation failed to recognize accruals and prepayments since the inception of its
business three years ago. The accruals and prepayments at the end of 2014 are given below:
Prepaid insurance P60,000
Accrued wages 75,000
Rent revenue collected in advance 96,000
Interest receivable 81,000
What is the net effect of the above errors in the 2014 net income?
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