ABC Company's December 31 year-end financial statements contained the following errors:20x120x2Ending inventoryDepreciationPrepaid insurance800,000 understated400,000 overstated150,000 understated50,000 overstatedIn addition, on December 31, 20x2, a fully depreciated equipment was sold for 100,000 cash but the sale wasnot recorded until 2020. Ignore income tax considerations.Requirements: Determine the total effect of the errors on the following:1. Net income for 20x12. Net income for 20x23. Retained earnings on December 31, 20x2

20X1 Effect on Net Income Ending inventory understated by 800,000 8,00,000 Understated…

Answered: ABC Company's December 31 year-end…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following is information for Novak Corp. for the year ended December 31, 2020: Sales revenue $1,420,000 Loss on inventory due to decline in net realizable value $70,000 Unrealized gain on FV-OCI equity investments 46,000 Loss on disposal of equipment 45,000 Interest income 9,000 Depreciation expense related to buildings omitted by mistake in 2019 56,000 Cost of goods sold 852,000 Retained earnings at December 31, 2019 950,000 Selling expenses 71,000 Loss from expropriation of land 57,000 Administrative expenses 52,000 Dividends declared 46,000 Dividend revenue 15,000 The effective tax rate is 25% on all items. Novak prepares financial statements in accordance with IFRS. The FV-OCI equity investments trade on the stock exchange. Gains/losses on FV-OCI investments are not recycled through net income. a)Prepare the retained earnings section of the statement of changes in equity for 2020. (List…
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ABC Corporation lost most of its inventory in a fire on April 10, 2020. Its books disclose following data: Inventory, January 1, 2020 Purchases in 2020 Purchases returns Sales Sales returns Purchases discounts Rate of gross profit on sales S180,000 400,000 30,000 650,000 25,000 10,000 30% Through the diligence of the local Fire Department, ABC was able to salvage and merchandise costing $4,000. Required: Calculate the amount of the loss from the fire, to be presented as a claim to th company. Show your computations.
If Wakowski Company's ending inventory was actually $86,000 but was adjusted at year end to a balance of $68,000 in error, what would be the impact on the presentation of the balance sheet and income statement for the year that the error occurred, if any? If no entry is required, select "None" and leave the amount boxes blank. Balance Sheet: Merchandise Inventory $4 Current Assets Total Assets Retained Earnings Income Statement: Cost of Goods Sold Gross Profit/Gross Margin Net Income
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A 105.
If a company produced a net income of P28,000.00 but failed to adjust for P1,500 in depreciation of equipment and P1,400 in accrued wages. Explain how this errors affected the net income. What will be the corrected net income.

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