Duke Company hired a new accountant late in December 2020 who made several errors when closing the books. Accrued salaries payable of $102,000 were not recorded at December 31, 2020. Office supplies on hand of $58,000 at December 31, 2021 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected before the financial statements were issued. The effect of these two errors would cause Question 3Select one: 2020 net income and December 31, 2020 retained earnings to be understated $102,000 each. 2020 net income to be overstated $44,000 and 2021 net income to be understated $58,000. 2021 net income to be understated $160,000 and December 31, 2021 retained earnings to be understated $58,000. 2021 net income and December 31, 2021 retained earnings to be understated $58,000 each.
Duke Company hired a new accountant late in December 2020 who made several errors when closing the books. Accrued salaries payable of $102,000 were not recorded at December 31, 2020. Office supplies on hand of $58,000 at December 31, 2021 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected before the financial statements were issued. The effect of these two errors would cause
Question 3Select one:
2020 net income and December 31, 2020
2020 net income to be overstated $44,000 and 2021 net income to be understated $58,000.
2021 net income to be understated $160,000 and December 31, 2021 retained earnings to be understated $58,000.
2021 net income and December 31, 2021 retained earnings to be understated $58,000 each.
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