1. What is the adjusted net income for 2017? 2. What is the net effect of the errors in the 2018 net income? 3. What is the net effect of the errors in the retained earnings at the end of 2017? 4. What is the net effect of the errors in the retained earnings at the end of 2018? Your examination of the financial statements of Water Corporation revealed the following errors weremade in the preparation of the 2017 financial statements:a. The depreciation expense in 2017 was recorded as P100,000, instead of P10,000b. Sales made in December 2017 for P150,000 were recorded in January 2018c. Rent paid on April 30, 2017, covering a one-year period was recognized as expense in 2017.Unexpired portion of P40,000 was not recorded at year-endd. Advances from customers amounting to P25,000 were recognized as sales in 2017. The goods wereshipped in 2018.e. Salaries totaling to P50,000 was not recorded at year-end. The expense was recorded upon paymentin 2018.f. Collections of accounts receivable in 2017 amounting to P20,000 were recorded in 2018.g. The unadjusted net income for 2017 is P650,000

Net income means the amount of profit earned after deducting all expenses from the revenue of the…

Answered: 1. What is the adjusted net income for…

1. What is the adjusted net income for 2017? 2. What is the net effect of the errors in the 2018 net income? 3. What is the net effect of the errors in the retained earnings at the end of 2017?

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

Q: If E-P28,091.16 and N = P11,213.00, what is the value of D? Note: E= Total Earnings D- Deduction N=…

A: Formula used : Net pay = Total Earnings - Deductions

Q: "The projected income statement method consists of taking the estimated income statement for the…

A: The income statement is the summary of income earned and expenses made in a certain period.…

Q: Salaries Expense is debited to record the employer's FICA contributions and the FUTA and SUTA taxes.…

A: Payroll tax: This is the tax which is withheld by an employer from the pay of the employee and…

Q: Refer to Revenue Procedure 2015-13, Section 7: Terms and conditions of change on page 44. Read…

A: 1. As per the Revenue Procedure 2015-13, Section 7, the adjustment period for a favorable is 1…

Q: If it is impracticable to determine the cumulative effect of an accounting change to any of the…

A: There are situations when company adopt to new method of accounting due to which changes occur in…

Q: will bills payable given to creditors affect the current ratio?

A: Current ratio is the ratio of Current Assets to Current Liabilities. Current ratio = Current…

Q: ne Income Statem

A: The correct statement is False

Q: which of the following transactions and events would result in an improvement in Interest Coverage…

A: The correct answer for the above mentioned question is given in the following steps for your…

Q: It is added to income received to determine the total income for the year that is recorded under the…

A: Net income: It can be defined as the excess of a company's sales revenue over the expenses incurred…

Q: Please explain the meaning of the following statement, I don't understand. The income reports net…

A: Income: It is often defined as the amount that is generated by a business from performing its…

Q: How does a company determine the amount of income tax expense to report in an interim period?

A: Income tax: Income tax refers to the direct tax levied on individual person or business and…

Q: ise in Petained earnings at the end of year 2? O Overstated O Understated O Cannot be determined…

Q: beginning retained earnings

A: Beginning retained earnings is the opening balance of retained earnings of an accounting year. It is…

Q: revenues ew less than expenses, what results on the income statement? What impact does an increase…

A: Note: Since you have posted a question with multiple sub-parts, we will solve first three subparts…

Q: An expense incurred/used up in 2020 is not paid until 2021. Using the accrual basis of accounting,…

A: The accrual concept states that the revenues and expenses should've reported when accrued,…

Q: Required information Problem 17-6AA (Algo) Income statement computations and format LO A2 (The…

A: Loss from operating a discontinued segment = $19850( pretax) Less:…

Q: How do you prepare annual financial statements?

A: In terms of accountancy, financial statements can be defined as the reports which provide the users…

Q: Which is not generally accepted in presenting the income statement?

A: Prior period errors are accounting errors that occur in a company's financial statements in one…

Q: es, such as paying a fee to an investment manager, generally are deductions from adjusted gross…

A: Investment refers to the form of securities or assets a company has bought in order to create an…

Q: If accrued liabilities are overestimated in the current period, the reported income in a following…

A: Accrued liabilities represent expenses that a company has incurred but has not yet paid as of the…

Q: accrued income in retained earnings at the end of year 2? a.Understated b.Cannot be determined from…

Q: hy do companies choose to accelerate depreciation on their tax return and not on their income…

A: Depreciation is the decrease in value of assets and in accerlated method there is more depreciation…

Q: What was the total income tax expense related to income from continuing operations before income…

A: Charge costs are the aggregate sum of expenses owed by an individual, enterprise, or other substance…

Q: 1. How much is the Interest Revenue to be recognized in 2021?

A: Given in the question: Total Initial Franchise Fee ₱20,00,000 Break-Down Cash…

Q: How about these questions: 1. How much is the balance of Account Receivable at December 31, 2021?…

A: Following is the answer of two questions.

Q: The times interest earned ratio is computed as Oa. Income Before Income Tax + Interest Expense Ob.…

A: Times interest earned ratio depicts the ability of an entity to service its interest expense. It…

Q: Which of the following journals would correctly post an adjustment for deferred (prepaid) income?…

A: The journal entries are prepared to keep the record of day to day transactions of the business on…

Q: how to calculate the year-end adjustment for Allowance for Uncollectible Accounts with a debit…

A: Uncollectible amounts from client accounts are referred to as bad debts. Accounts receivable suffers…

Q: What is the effect of omission of accrued income in retained earnings at the end of year 2? a.…

A: A basic Accounting equation is given as under; Assets = Equity + Liabilities Meaning, Total…

Q: What will be the result for failing to record the year-end adjustment for accrued interest on a note…

A: Notes payable is the amount of loan owed by the entity to its financiers. It is always a liabilities…

Q: Which of the following are items which are likely need an accrual adjustment at the year end?

A: In order to recognize revenue or expense that has been earned or incurred but has not yet been…

Q: How about these questions: 1. how much is the Net Income (Loss) in 2021? 2. assuming the…

A: Lets understand the basics. For calculating requirement, we need to use below formula. Net income…

Q: Net income is the amount of money you earn before deductions money earned from working, investments,…

A: Net Income is also known as net profit.

Q: What is the real return? Multiple Choice The after-tax return on assets. The pre-tax return…

A: Rate of return is the percentage of profit that is earned on an investment.

Q: Which of the following questions cannot be answered when analyzing the information presented in an…

A: Answer: Income statement is the statement which shows the profit or loss when the revenue and…

Q: Using IFRS, how should prior period errors that are discovered in a subsequent reporting period be…

A: IFRS: They are commonly known as IFRS. It is a set of accounting standards which are developed by…

Q: Indicate whether the following statement is true or false. At the end of the financial year, the…

A: The difference between direct revenue and costs is the gross profit/loss. The Trading account is set…

Q: Joseph Bright lists the following transactions for the period ended 30 September 2017. Classify EACH…

A: The objective of the question is to classify the given transactions into either 'capital' or…

Question

1. What is the adjusted net income for 2017?

2. What is the net effect of the errors in the 2018 net income?

3. What is the net effect of the errors in the retained earnings at the end of 2017?

4. What is the net effect of the errors in the retained earnings at the end of 2018?

Your examination of the financial statements of Water Corporation revealed the following errors were
made in the preparation of the 2017 financial statements:
a. The depreciation expense in 2017 was recorded as P100,000, instead of P10,000
b. Sales made in December 2017 for P150,000 were recorded in January 2018
c. Rent paid on April 30, 2017, covering a one-year period was recognized as expense in 2017.
Unexpired portion of P40,000 was not recorded at year-end
d. Advances from customers amounting to P25,000 were recognized as sales in 2017. The goods were
shipped in 2018.
e. Salaries totaling to P50,000 was not recorded at year-end. The expense was recorded upon payment
in 2018.
f. Collections of accounts receivable in 2017 amounting to P20,000 were recorded in 2018.
g. The unadjusted net income for 2017 is P650,000

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

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

In year 2022, collection of interest income is credited to Interest Expense. What is the effect of the error in year 2022 revenue and expenses? a.Revenue - understated; expenses - overstated b.Revenue - overstated; expenses - overstated c.Revenue - understated; expenses - understated d.Revenue - overstated; expenses - understated
The payment of supplier's account is debited to accounts receivable. What is the effect of the error in the net income of the current period and in subsequent period? Cannot be determined based.on the given information Overstated O Understated O No effect
In year 2022, collection of interest income is credited to Interest Expense. What is the effect of the error in year 2022 revenue and expenses? a. Revenue - understated; expenses - understated b. Revenue - overstated; expenses - overstated c. Revenue - understated; expenses - overstated d. Revenue - overstated; expenses - understated
5. The following items affect the retained earnings account, except Group of answer choices a. net income or loss for the period b. prior period errors c. realization of revaluation surplus d. effect of change in accounting estimate
A revenue was earned in 2019 but payment is not received until 2020. Using the accrual basis of accounting, the revenue should appear on: A. the 2020 income statement B. the 2019 income statement C. both the 2019 and 2020 income statements D. neither the 2019 nor 2020 income statement
A prior period adjustment relates to the income of pastaccounting periods. Explain how such an item is shown inthe financial statements.
Required: Prepare a statement of profit or loss for the year ending 31 May 2016 and a statement of financiar position as at that date.
Gross income minus tax-exempt income equals adjusted gross income. True False
The calculation of the times interest earned involves dividing net income by annual interest expense. net income plus income taxes by annual interest expense. net income plus income taxes and interest expense by annual interest expense. None of these answers are correct.
Which of the following calculations of receivable turnover is correct? A. Number of days in the year divided by receivable turnover. B. Net sale on account divided by average receivables. C. Cost of goods sold divided by average inventory. D. Net income divided by net sales.
Generally accepted methods of accounting for a change in accounting principle include O ncluding the cumulative effect of the change in current period net income. restating prior years' financial statements presented for comparative purposes. O making a prior period adjustment. O prospective changes.