BETA Company began operations in January 2021. Financial statements for the years ended December 31, 2021 and 2022 contained the following errors: • Ending inventory, 2021 - P16,000 understated • Ending inventory, 2022 - P15,000 overstated • Depreciation expense, 2021 - P6,000 understated • Insurance expense, 2021 - P10,000 overstated • Insurance expense, 2022 - P10,000 understated • Prepaid insurance, 2021 - P10,000 understated • In addition, on December 31, 2022, a fully depreciated machinery was sold for P10,800 cash, but the sale was not recorded until 2023. There were no other errors during 2021 and 2022 and no correction have been made for any of the errors.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Ignoring income taxes, what is the total effect of the errors on the beginning balance of
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