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During your audit of the books of Colorado Corporation for the year ended December 31, 2021, you discovered that certain accrued income and expenses were overlooked at the end of 2019, 2020 and 2021.
| Not recognized at year end | 2019 | 2020 | 2021 |
| Accrued interest income | 2,000 | 3,000 | |
| Accrued salaries expense | 12,000 | 6,000 | |
| Accrued rent payable | 20,000 | ||
| Net income for the year | 500,000 | 550,000 | 600,000 |
| 8,300,000 | 8,800,000 | 9,200,000 |
REQUIRED:
Based on the foregoing, compute the corrected balances of following:
- Net income for 2019
- Net income for 2020
- Net income for 2021
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- You are now in the completion stage of your audit of the financial statements of Endgame Inc. for the period ended December 31, 2021. In relation to this, you reviewed relevant subsequent events up to April 15, 2022, the date financial statements were approved for issuance by Endgame Inc.'s Board of Directors. The following information are deemed relevant as a result of your review: A The company has a 10%, P2 million Notes Payable due on March 31, 2024. A debt covenant requires Endgame Inc. to maintain current assets at least equal to 150% of its current liabilities. On December 31, 2021, however, Endgame Inc. is in violation of this covenant. On December 31, 2021, Endgame. obtained a grace period for another year, that is up to December 31, 2022, from Avenger Bank, having convinced the bank that the company's normal current ratio of 2:1 will be reestablished by the end of the year. B. The company has another P5 million, 5-year, non-cancelable 13% bonds issued at face value on March…PROBLEM 8 - AUDITING PROBLEMCompute the following:1. The corrected pre-tax profit for 20212. What is the net effect of the foregoing errors on the total assets at December 31, 2021? 3. What is the total understatement of the total liabilities at December 31, 2021?You audited the financial statements of PIS Corp. for the first time in 2021. The company started its operation in early 2019. Upon investigation, you discovered the following information: - The company reported the net income at P104,000, P140,000 and P160,000 in 2019, 2020, and 2021, respectively. - The company consistently omitted the following: 2019 2020 2021Prepaid insurance 2,000 4,000 6,000 Accrued salaries 7,500 6,200 8,300 Unearned rent 5,000 6,000 7,000 - Deliveries of merchandise to customers at December 31 of each year end were recorded as sales upon collection the following year. The corresponding sales price of the said deliveries were P15,000, P12,000 and P14,000 in 2019, 2020, and 2021, respectively. - Inventory counts were conducted on December 31 of each year before any deliveries and receipts were made on the said date. Sales were made consistently at a gross profit…
- please help meIn the audit of Atlanta Corporation’s financial statements at December 31, 2025, the chief accountant of the staid corporation provided the following information: Notes payable: Arising from purchase of goods 304,000 Arising from 5 year-bank loans, on which marketable securities valued at P600,000 have been pledged as security, P400,000 due on June 30, 2026; P100,000 due on Dec. 31, 2026 500,000 Arising from advances by officers, due June 30, 2026 50,000 Reserve for general contingencies 400,000 Employees’ income tax withheld 20,000 Advances received from customers on purchase orders 64,000 Containers’ deposit 50,000 Accounts payable arising from purchase of goods, net of debit balances of P40,000 170,000 Cash dividends payable 80,000 Stock dividend payable 100,000 Dividends in arrears on preferred stock, not yet declared…Income from Continuing Operations
