Company ABC reported initial net income of $8,500 and end-of-year retained earnings of $52,000. During the year-end audit, it was discovered that: ⚫ Revenues were undercounted by $3,000 ⚫ Depreciation expense was overcounted by $1,200 ⚫ Insurance expense was undercounted by $800 Calculate the adjusted net income.
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- You are auditing the financial statements of A Company for the year ended December 31, 2023. The Company's income statements indicated the following net income:2021: P1,200,0002022: P1,490,0002023: P1,325,000An examination of the accounting records for the year ended December 31, 2023 indicates that several errors were made. The following errors were discovered:A. Unused supplies at the end of each year were consistently omitted:2020: P95,000; 2022: P100,000; 2023: P140,000B. The footings and extensions showed that the inventory on December 31, 2022 was understated by P80,000C. P105,000 worth of inventories were received on January 5, 2022 and were not included in the physical count as of December 31, 2021. Upon investigation, however, you discovered that these goods were shipped free-alongside by the supplier on December 28, 2021. The invoice for the goods were received and recorded in the purchase journal on December 29, 2021.D. The following advance payments to suppliers at the…You are evaluating audit results for assets in the audit ofRoberts Manufacturing. You set the preliminary judgment about materiality at $50,000.The account balances, performance materiality, and estimated overstatements in theaccounts are shown next.Account Performance Estimate of TotalAccount Balance Materiality OverstatementsCash $ 50,000 $ 5,000 $ 1,000Accounts receivable 1,200,000 30,000 20,000Inventory 2,500,000 50,000 ?Other assets 250,000 15,000 12,000Total $4,000,000 $100,000 ? a. Assume you tested inventory amounts totaling $1,000,000 and found $10,000 inoverstatements. Ignoring sampling risk, what is your estimate of the total misstatement in inventory?b. Based on the audit of the assets accounts and ignoring other accounts, are the overallfinancial statements acceptable? Explain.c. What do you believe the auditor should do in the circumstances?Michael Corporation is on a calendar year basis. The following data were found during your audit: 1) An excerpt from the client’s trial balance revealed the following account balances:Accounts receivable P 80,000Inventory, per count 1,200,000Accounts payable 790,000Net sales 6,050,000Net purchases 3,300,000Net income 610,000 2) The client conducted an inventory count on December 31, 2021. Michael Corporation normally sells at 30% gross profit based on selling price. 3) Goods were in transit FOB destination from a supplier in the amount of P120,000. Further testing revealed that the supplier's invoice pertaining to the delivery was received and recorded on December 28, 2021. 4) Good costing P70,000 had been received on December 31 and recorded as a purchase. However, upon your inspection, the goods were found to be defective and would be immediately returned. 5) Materials costing P224,000, sold and billed on December 30 under a “bill and hold” agreement, had been segregated in the…
- whats the answer in the 2nd number?Use the following information to answer the next four (4) items Based on your audit of the financial statements of Rangers Company, the following omissions were discovered: 2019 2020 Prepaid expense 24,000 18,000 Unearned income 10,000 12,000 Accrued expense 13,000 14,000 Accrued income 22,000 25,000 You discovered further that an enhancement made on a machinery on January 2, 2019 for P500,000 was charged to expense. The remaining useful life of the machinery on December 31, 2020 is 3 years. What is the net effect of the errors on the 2019 net income? Select the correct response: Overstatement of P77,000 Understatement of P523,000 Understatement of P423,000 Overstatement of P323,000As a result of analytical procedures an auditor determines that gross profit has declined from 30% to 15% in the current year. The auditor should.. A. Document manamgent intentions with respect to reversing the trend. B. Evaluate managment's performance in causing the deline C. Require a footnote disclosure D. Consider the possibility of an error in the financial statements.
- Sandhill Rental Company provided the following information to its auditors. For the year ended March 31, 2017, the company had revenues of $877,800, general and administrative expenses of $358,200, depreciation expenses of $131,455, leasing expenses of $108,195, and interest expenses equal to $78,122. If the company's average tax rate is 34 percent, what is its net income after taxes? (Round intermediate calculations and final answer to the nearest whole dollar, e.g. 5,275.)Excel Template(Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you’ve been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.) Sandhill Rental CompanyIncome Statement as of March 31, 2017 Amount select an income statement…Sandhill Rental Company provided the following information to its auditors. For the year ended March 31, 2017, the company had revenues of $877,800, general and administrative expenses of $358,200, depreciation expenses of $131,455, leasing expenses of $108,195, and interest expenses equal to $78,122. If the company's average tax rate is 34 percent, what is its net income after taxes? (Round intermediate calculations and final answer to the nearest whole dollar, e.g. 5,275.) Sandhill Rental CompanyIncome Statement as of March 31, 2017Amount select an income statement item Depreciation ExpensesRent RevenueEarnings Before Interest, Taxes, Depreciation, and AmortizationNet Income / (Loss)Leasing ExpensesRevenuesGeneral and Administrative ExpensesUtilities ExpenseEarnings Before Interest and TaxesInterest ExpenseEarnings Before TaxesTaxes $enter a dollar amount select an income statement item…Dayton Corporation began the current year with a retained earnings balance of $16,873. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $2,491 on a piece of equipment. Also, during the current year, the company earned net income of $12,824 and declared cash dividends of $4,659. Compute the year-end retained earnings balance. Oa. $36,847 b. $22,547 c. $16,873 Od. $25,038
- E4-19 (Algo) Reporting a Correct Income Statement with Earnings per Share to Include the Effects of Adjusting Entries and Evaluating Total Asset Turnover as an Auditor LO4-1, 4-2, 4-3 Jay, Inc., a party rental business, completed its third year of operations on December 31. Because this is the end of the annual accounting period, the company bookkeeper prepared the following tentative income statement: Income Statement Rent revenue $ 106,000 Expenses: Salaries and wages expense 25,400 Maintenance expense 11, 200 Rent expense 7,600 Utilities expense 3,500 Gas and oil expense 3,500 Miscellaneous expenses (items not listed elsewhere) 1,900 Total expenses 53,100 Income $ 52,900 You are an independent CPA hired by the company to audit the company's accounting systems and review the financial statements. In your audit, you developed additional data as follows: a. Wages for the last three days of December amounting to $630 were not recorded or paid. b. Jay estimated telephone usage at $370…What is the effect of the foregoing errors on retained earnings at December 31, 2011?A. P 22,000 overstatedB. P 38,000 understatedC. P 67,000 overstatedD. P 82,000 overstatedYou were able to gather the following from your first-time audit client, ABC Corporation, as of and for the period ended December 31, 2021: Supplies bought last October 20, 2020; 10% used during 2020; 20% remaining as of December 31, 2021; entry made in 2020 includes a debit to expense for the whole amount 50,000 Advance rental payment for 3 months paid to lessor on November 30, 2021; amount charged to rent expense; no adjusting entry made Sales recorded on January 2, 2022 pertaining to a merchandise shipped to a customer last December 28, 2021; FOB Shipping point 30,000 120,000 Purchases recorded last December 30, 2021; merchandise was shipped last December 29, 2021, received January 3, 2022; FOB Destination Interest on an amount lent to a borrower; note was received last December 1, 2021; term is 6 months; face value is P100,000; no interest income recorded; 45,000 interest rate per annum is 9% A minor repair on an equipment on January 2, 2021 was capitalized; the useful life of the…
