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Case 3-Effects of Er On January 2, 2019, a piece of equipment costing P250,000 was sold pany for The Statement of Comprehensive Income of the years ended December 2019, 2020, and 2021 indicate the followin income: 2021 - P367,000 2020-P402,000 2019-P320,000 An examination of the accounting records for these years indicates thet several errors were made in arriving at the net income amounts reported The following errors were discovered: a. Sale of merchandise on account amounting to P100,000 was recorded twice at the end of 2021, b. Goods costing P24,000 were in transit from a supplier on December 31, 2019. The goods were appropriately included in the ending inventory but the corresponding purchase was not recorded until it is received the following year. e. Accrued salaries were consistently omitted from the records. The amounts omitted were: 2019-P35,000 The merchandise inventory at December 31, 2020 was overstated by P40,000 as the result of errors made in the footings and extensions on the inventory sheets. Unexpired insurance of P22,000 applicable to 2020 was expensed n 2019. Interest receivable of P12,500 was not recorded on December 31. 2021. 2020 - P47,000 2021- P29,000 or P120,000. At the date of sale, the equipment apreciation of P100,000, The

Case 3-Effects of Er On January 2, 2019, a piece of equipment costing P250,000 was sold pany for The Statement of Comprehensive Income of the years ended December 2019, 2020, and 2021 indicate the followin income: 2021 - P367,000 2020-P402,000 2019-P320,000 An examination of the accounting records for these years indicates thet several errors were made in arriving at the net income amounts reported The following errors were discovered: a. Sale of merchandise on account amounting to P100,000 was recorded twice at the end of 2021, b. Goods costing P24,000 were in transit from a supplier on December 31, 2019. The goods were appropriately included in the ending inventory but the corresponding purchase was not recorded until it is received the following year. e. Accrued salaries were consistently omitted from the records. The amounts omitted were: 2019-P35,000 The merchandise inventory at December 31, 2020 was overstated by P40,000 as the result of errors made in the footings and extensions on the inventory sheets. Unexpired insurance of P22,000 applicable to 2020 was expensed n 2019. Interest receivable of P12,500 was not recorded on December 31. 2021. 2020 - P47,000 2021- P29,000 or P120,000. At the date of sale, the equipment apreciation of P100,000, The

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter7: Fixed Assets, Natural Resources, And Intangible Assets
Section: Chapter Questions
Problem 7.3.2MBA
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the years ended December 2019, 2020, and 2021 indicate the following net g. On January 2, 2019, a piece of equipment costing P250,000 was sold for P120,000. At the date of sale, the equipment had an accumulated depreciation of P100,000. The cash received was recorded as income Case 3-Effects of Error on Net Income income: 2021 - P367,000 2020-P402,000 2019-P320,000 An examination of the accounting records for these years indicates thet several errors were made in arriving at the net income amounts reported The following errors were discovered: a. Sale of merchandise on account amounting to P100,000 was recorded twice at the end of 2021, b. Goods costing P24,000 were in transit from a supplier on December 31, 2019. The goods were appropriately included in the ending inventory but the corresponding purchase was not recorded until it is received the following year. C. Accrued salaries were consistently omitted from the records. The amounts omitted were: 2019-P35,000 2020 - P47,000 2021- P29,000 d. The merchandise inventory at December 31, 2020 was overstated by P40,000 as the result of errors made in the footings and extensions on the inventory sheets. e. Unexpired insurance of P22,000 applicable to 2020 was expensed in 2019. f. Interest receivable of P12,500 was not recorded on December 31. 2021. Page 150
Transcribed Image Text:the years ended December 2019, 2020, and 2021 indicate the following net g. On January 2, 2019, a piece of equipment costing P250,000 was sold for P120,000. At the date of sale, the equipment had an accumulated depreciation of P100,000. The cash received was recorded as income Case 3-Effects of Error on Net Income income: 2021 - P367,000 2020-P402,000 2019-P320,000 An examination of the accounting records for these years indicates thet several errors were made in arriving at the net income amounts reported The following errors were discovered: a. Sale of merchandise on account amounting to P100,000 was recorded twice at the end of 2021, b. Goods costing P24,000 were in transit from a supplier on December 31, 2019. The goods were appropriately included in the ending inventory but the corresponding purchase was not recorded until it is received the following year. C. Accrued salaries were consistently omitted from the records. The amounts omitted were: 2019-P35,000 2020 - P47,000 2021- P29,000 d. The merchandise inventory at December 31, 2020 was overstated by P40,000 as the result of errors made in the footings and extensions on the inventory sheets. e. Unexpired insurance of P22,000 applicable to 2020 was expensed in 2019. f. Interest receivable of P12,500 was not recorded on December 31. 2021. Page 150
Chapter 1: Audit Planning and Misstatement in 2019. In addition, depreciation was recorded for this equipment in 2019 at the rate of 10% of cost. Determine the following as a result of your audit: 1. How much is the adjusted net income in 2018? a. P218,000 b. P184,000 c. P164,000 d. P158,000 2. How much is the adjusted net income in 2019? a. P321,000 b. P352,000 c. P388,000 d. P402,000 3. How much is the adjusted net income in 2020? a. P337,500 LON c. P537,500 d. P582,500 b. P487,500
Transcribed Image Text:Chapter 1: Audit Planning and Misstatement in 2019. In addition, depreciation was recorded for this equipment in 2019 at the rate of 10% of cost. Determine the following as a result of your audit: 1. How much is the adjusted net income in 2018? a. P218,000 b. P184,000 c. P164,000 d. P158,000 2. How much is the adjusted net income in 2019? a. P321,000 b. P352,000 c. P388,000 d. P402,000 3. How much is the adjusted net income in 2020? a. P337,500 LON c. P537,500 d. P582,500 b. P487,500
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