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 net income for the year 2022?
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 net income for the year 2022?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text: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 net income for the year 2022?
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