Bonita, Inc. is a calendar-year corporation. Its financial statements for the years 2021 and 2020 contained errors as follows:Ending inventoryDepreciation expenseO $6000 overstatedO $15750 understatedOO $6000 understated2021$0$10200 overstated$5550 understated2020Assume that no correcting entries were made at December 31, 2020, or December 31, 2021 and that no additional errors occurred in2022. Ignoring income taxes, by how much will working capital at December 31, 2022 be overstated or understated?$23500 overstated$17500 overstated

Working capital: Managing the day to day operations of an organization is called working capital…

Bonita, Inc. is a calendar-year corporation. Its financial statements for the years 2021 and 2020 contained errors as follows: Ending inventory Depreciation expense 2021 O $6000 overstated O $15750 understated 0 $0 O $6000 understated $10200 overstated $5550 understated 2020 $23500 overstated $17500 overstated Assume that no correcting entries were made at December 31, 2020, or December 31, 2021 and that no additional errors occurred in 2022. Ignoring income taxes, by how much will working capital at December 31, 2022 be overstated or understated?

Bonita, Inc. is a calendar-year corporation. Its financial statements for the years 2021 and 2020 contained errors as follows: Ending inventory Depreciation expense 2021 O $6000 overstated O $15750 understated 0 $0 O $6000 understated $10200 overstated $5550 understated 2020 $23500 overstated $17500 overstated Assume that no correcting entries were made at December 31, 2020, or December 31, 2021 and that no additional errors occurred in 2022. Ignoring income taxes, by how much will working capital at December 31, 2022 be overstated or understated?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

PLEASE ANSWER ASAP. THANK YOU SO MUCH. During your examination of the accounting books of South Sky Company for the year ended December 31, 2022 revealed the following errors: 1. Unrecorded unpaid salaries at the end of 2021 and 2022 were P 100,000 and P 140,000, respectively. 2. The following errors were discovered in the audit of inventory at December 31, 2021: (a) over footing, P 220,000; (b) Under extension, P 30,000. 3. Unexpired insurance of P 120,000 for the year 2023 was expensed in 2022. 4. Unrecorded interest receivable at the end of 2023, P 20,000. 5. The proceeds of P 220,000 from sale of a machinery with a cost of P 400,000 was credited to Miscellaneous Income on January 1, 2022. The machinery was 60% depreciated on the date of sale. Depreciation for 2022 was recorded at the rate of 10%. The reported net income at the end of 2021 and 2022 were P 1,750,000 and P 2,000,000, respectively. QUESTIONS: 1. what is the correct net income for the year 2021? 2. What is the correct…
During your audit of the books of Antigua Corporation for the year ended December 31, 2021, you discovered the following errors during the years 2019, 2020 and 2021. Errors 2019 2020 2021 Understatement of ending inventory 25,000 30,000 Overstatement of ending inventory 16,000 Omission of the following: Prepaid insurance 7,500 10,000 Unearned rent income 8,000 Accrued salaries expense 12,000 10,000 Accrued interest revenue 2,000 3,000 Erroneous capitalization of machinery repairs 15,000 Overstatement of machinery depreciation 1,500 1,500 Erroneous charging to expense of equipment cost 25,000 Understatement of equipment depreciation 2,500 2,500 2,500 Net income for the year 1,500,000 2,000,000 2,250,000 Retained earnings at year-end 7,500,000 8,750,000 9,250,000 Machinery has an estimated useful life of 10 years while equipment is 5 years. REQUIRED: Compute the corrected balances of the…
Wildhorse, Inc. is a calendar-year corporation whose financial statements for 2020 and 2021 included errors as follows: Year Ending Inventory Depreciation Expense 2020 $414000 overstated $360000 overstated 2021 137000 understated 103500 understated Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2020, or at December 31, 2021. Ignoring income taxes, by how much should Wildhorse's retained earnings be retroactively adjusted at January 1, 2022? $87500 increase $33500 decrease $20500 increase $393500 increase
During 2022, Emerald Inc. decided to change from FIFO method of inventory valuation to the weighted average method. January 1 inventory under FIFO 7,100,000 January 1 inventory under weighted average 7,700,000 December 31 inventory under FIFO 7,900,000 December 31inventory under weighted average 8,300,000 In the statement of retained earnings for 2022, what amount should be reported as the pretax cumulative effect of this accounting change? (A) 1,000,000 deduction (B) 1,000,000 addition C 600,000 deduction D 600,000 addition
During the audit of BAC Company's 2029 financial statements, the auditors discovered that the 2029 ending inventory had been understated by $12,000 and that the 2029 beginning inventory was overstated by $9,000. Before the effect of these errors, 2029 pretax income had been computed as $115,000. What should be reported as the correct 2029 pretax income? A) $112,000 B) $94,000 C) $118,000 D) $136,000 E) $103,000
ACDC Pty Ltd included inventory that had cost $55,000 at its market value of $75,000 in the statement of financial position for the year ended 30 June 2019. Which accounting principle has been violated?
Upon inspection of the records of Eisenhower Company in connection to its financial statement audit for the year ended December 31, 2022, the following errors were revealed: A fire insurance premium of P 40,000 was paid and charged to insurance expense in 2021. This covers one year from April 1, 2021. Inventory at December 31, 2020 was understated by P 80,000. Inventory at December 31, 2021 was understated by P 120,000. • The year 2021 last quarter taxes amounting to P 60,000 were paid on January 19, 2022 and charged to expense account of 2022. A cash advance of P 100,000 in payment of goods to be delivered in January 2022 was received on December 15, 2021 and credited to Sales. • The gross profit on sales is 40%. The net income for the year ended December 31, 2021 before any adjustments is P 1,550,000. O 1,550,000 O 1,200,000 O 1.440,000 O 1.600,000
Bananas, Inc. is a calendar-year corporation. Its financial statements for the years ended December 31, 2019 and 2020 contained the following errors: Ending Inventory Depreciation expense 2019 $25,000 overstatement 10,000 understatement 2020 $40,000 understatement 20,000 overstatement Assume that no correcting entries were made in 2019 or 2020 and that no errors existed in 2018. Ignoring income taxes, by how much will retained earnings at December 31, 2020 be overstated or understated? Enter an overstatement as a positive number and an understatement as a negative number.
Vai
You have been assigned to examine the financial statements of PC corp. for the year ended December 31, 2021, as prepared following IFRS. You discover the following situations: 1. Physical inventory count on Dec 31, 2021, improperly included merchandise costing $3,800 that had been sold but not delivered until Jan 5, 2022. PC uses a periodic inventory system. 2. Depreciation of $1,700 for 2021 on delivery vehicles was not recorded. 3. A collection of $4,600 on account from a customer received on Dec 31, 2021, was not recorded. 4. At the beginning of 2020, the company purchased equipment for $225,000 (residual value $22,500) and had a useful life of 6 years. The accountant used straight-line amortization but failed to deduct the residual value in the calculation of the depreciation for 2020 and 2021. Instructions: Prepare the required journal entries (if any) to correct PC accounts, assuming each transaction is independent and assuming 2021 books are not closed.