Exercise 6. Effect of omitting adjusting entryAccrued salaries of P3,100 owed to employees for December 30 and 31 are not considered in preparingthe financial statements for the year ended December 31. Indicate which items will be erroneouslystated, because of the error, on (a) the SCI for the year and (b) the SFP as of December 31. Alsoindicate whether the items in error will be overstated or understated.Exercise 7. Adjusting entries for prepaid and accrued taxesMillenium Financial Services was organized on April 1 of the current year. On April 2, Millenium prepaidP1,020 to the city for taxes (license fees) for the next 12 months and debited the prepaid taxes account.Millenium is also required to pay in January an annual tax (on property) for the previous calendar year.The estimated amount of the property tax for the current year (April 1 to December 31) is P10,210.(a) Journalize the two adjusting entries required to bring the accounts affected by the two taxes up todate as of December 31, the end of the current year.(b) What is the amount of tax expense for the current year?Exercise 8. Effects of errors on financial statementsFor a recent period, Circuit City Stores reported accrued expenses and other current liabilities ofP204,561,000. For the same period, Circuit City reported earnings of P528,758,000. If accruedexpenses and other current liabilities had not been recorded, what would have been the earnings(loss)?

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Exercise 6. Effect of omitting adjusting entry Accrued salaries of P3,100 owed to employees for December 30 and 31 are not considered in preparing the financial statements for the year ended December 31. Indicate which items will be erroneously stated, because of the error, on (a) the SCI for the year and (b) the SFP as of December 31. Also indicate whether the items in error will be overstated or understated.

Exercise 6. Effect of omitting adjusting entry Accrued salaries of P3,100 owed to employees for December 30 and 31 are not considered in preparing the financial statements for the year ended December 31. Indicate which items will be erroneously stated, because of the error, on (a) the SCI for the year and (b) the SFP as of December 31. Also indicate whether the items in error will be overstated or understated.

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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