ABC Company reported net income and retained earnings for a two-year period as follows: 2020 2021 Net Income Retained Earnings, Ending 6,000,000 14,000,000 6,000,000 8,000,000 In checking the statement for the year ended December 31, 2020, the following errors are discovered: 1. The company paid one-year insurance premium of P 240,000 effective April 1, 2020. The entire amount was debited to asset account and no adjustment was made at the end of 2020. 2. The company leased a portion of its building for P 480,000. The term of the lease is one year ending April 30, 2021. Collection of rent was credited to unearned rent revenue account. At the end of 2020, no entry was made to take up the earned portion of the amount collected. 3. Depreciation expense in 2020 was understated by P 12,000. 4. Depreciation expense in 2021 was overstated by P 14,000. 5. Bad debts expense of P 11,000 was not recorded in 2020. How much is the adjusted 2020 Net Income?
ABC Company reported net income and retained earnings for a two-year period as follows: 2020 2021 Net Income Retained Earnings, Ending 6,000,000 14,000,000 6,000,000 8,000,000 In checking the statement for the year ended December 31, 2020, the following errors are discovered: 1. The company paid one-year insurance premium of P 240,000 effective April 1, 2020. The entire amount was debited to asset account and no adjustment was made at the end of 2020. 2. The company leased a portion of its building for P 480,000. The term of the lease is one year ending April 30, 2021. Collection of rent was credited to unearned rent revenue account. At the end of 2020, no entry was made to take up the earned portion of the amount collected. 3. Depreciation expense in 2020 was understated by P 12,000. 4. Depreciation expense in 2021 was overstated by P 14,000. 5. Bad debts expense of P 11,000 was not recorded in 2020. How much is the adjusted 2020 Net Income?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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9
Transcribed Image Text:ABC Company reported net income and retained earnings for a two-year period as
follows:
2020
2021
Net Income Retained Earnings, Ending
6,000,000
14,000,000
6,000,000
8,000,000
In checking the statement for the year ended December 31, 2020, the following errors
are discovered:
1. The company paid one-year insurance premium of P 240,000 effective
April 1, 2020. The entire amount was debited to asset account and no
adjustment was made at the end of 2020.
2. The company leased a portion of its building for P 480,000. The term of
the lease is one year ending April 30, 2021. Collection of rent was
credited to unearned rent revenue account. At the end of 2020, no entry
was made to take up the earned portion of the amount collected.
3. Depreciation expense in 2020 was understated by P 12,000.
4. Depreciation expense in 2021 was overstated by P 14,000.
5. Bad debts expense of P 11,000 was not recorded in 2020.
How much is the adjusted 2020 Net Income?
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