A. While examining the December 31, 2020 financial statements of Don Co., you discover the fol- lowing: 1. Inventory at January 1, 2020 had been overstated by P30,000 2. Inventory at December 31, 2020 was understated by P50,000 3. During 2020, Don received a P100,000 cash advance from a customer for merchandise to be manufactured and shipped during 2021. The amount was credited to sales revenue. 4. The net income reported on the 2020 income statement before reflecting any adjustments for the above items is P3,000,000 Required: Determine the corrected net income for the year ended December 31, 2020.
A. While examining the December 31, 2020 financial statements of Don Co., you discover the fol- lowing: 1. Inventory at January 1, 2020 had been overstated by P30,000 2. Inventory at December 31, 2020 was understated by P50,000 3. During 2020, Don received a P100,000 cash advance from a customer for merchandise to be manufactured and shipped during 2021. The amount was credited to sales revenue. 4. The net income reported on the 2020 income statement before reflecting any adjustments for the above items is P3,000,000 Required: Determine the corrected net income for the year ended December 31, 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A. While examining the December 31, 2020 financial statements of Don Co., you discover the fol-
lowing:
1.
Inventory at January 1, 2020 had been overstated by P30,000
2.
Inventory at December 31, 2020 was understated by P50,000
3.
During 2020, Don received a P100,000 cash advance from a customer for merchandise to
be manufactured and shipped during 2021. The amount was credited to sales revenue.
4.
The net income reported on the 2020 income statement before reflecting any adjustments
for the above items is P3,000,000
Required:
Determine the corrected net income for the year ended December 31, 2020.
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