Example 3 Joseph Co. began operations on January 1, 2020. Financial statements for 2020 and 2021 contained the following errors: Ending Inventory Insurance Expense December 31, 2020 $80,000 Overstated 42,000 Overstated December 31, 2021 $114,000 Overstated 42,000 Understated In addition, on December 26, 2021 fully depreciated equipment was sold for $53,000, but the sale was not recorded until 2022. No corrections have been made for any of the errors. Required: Ignoring income taxes, show your calculation of the total effect of the errors on 2021 net income.

Example 3 Joseph Co. began operations on January 1, 2020. Financial statements for 2020 and 2021 contained the following errors: Ending Inventory Insurance Expense December 31, 2020 $80,000 Overstated 42,000 Overstated December 31, 2021 $114,000 Overstated 42,000 Understated In addition, on December 26, 2021 fully depreciated equipment was sold for $53,000, but the sale was not recorded until 2022. No corrections have been made for any of the errors. Required: Ignoring income taxes, show your calculation of the total effect of the errors on 2021 net income.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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An error understated Power Corporation’s December 31, 2018, ending inventory by$54,000. What effect will this error have on total assets and net income for 2018?Assets Net incomea. Understate Understateb. Understate No effectc. No effect Overstated. No effect No effect
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Subject: accounting
whats the answer in question 5?