For three years Chona's Merchandise failed to recognize accruals, prepayments and other transactions in its accounts. Reported net income and a listing of the errors appear below: 2019 2018 1,200,000 2020 (100,000) Reported Net Income (Loss) a. Failed to record accrued expenses 20,000 48,000 b. 13,000 12,000 15,000 Failed to record accrued salaries Understated depreciation expense Overstated ending inventories Failed to record purchase on account; merchandise properly included in ending inventory 36,000 40,000 Failed to recognize unused supplies at the end 3,000 4,000 of the accounting period 60,000 Failed to recognize gain on sale of land; Land credited for amount of proceeds. 9,000 Failed to recognize unearned revenue at end of accounting period. c. d. h. 400,000 25,000 18,000 15,000 28,000 5,000
For three years Chona's Merchandise failed to recognize accruals, prepayments and other transactions in its accounts. Reported net income and a listing of the errors appear below: 2019 2018 1,200,000 2020 (100,000) Reported Net Income (Loss) a. Failed to record accrued expenses 20,000 48,000 b. 13,000 12,000 15,000 Failed to record accrued salaries Understated depreciation expense Overstated ending inventories Failed to record purchase on account; merchandise properly included in ending inventory 36,000 40,000 Failed to recognize unused supplies at the end 3,000 4,000 of the accounting period 60,000 Failed to recognize gain on sale of land; Land credited for amount of proceeds. 9,000 Failed to recognize unearned revenue at end of accounting period. c. d. h. 400,000 25,000 18,000 15,000 28,000 5,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1. What is the adjusted net income for 2019?*
Transcribed Image Text:For three years Chona's Merchandise failed to recognize accruals, prepayments and other transactions
in its accounts. Reported net income and a listing of the errors appear below:
2018
2019
2020
(100,000)
Reported Net Income (Loss)
1,200,000
400,000
a.
Failed to record accrued expenses
20,000
25,000
48,000
b.
Failed to record accrued salaries
13,000
18,000
C.
12,000
15,000
15,000
Understated depreciation expense
Overstated ending inventories
d.
36,000
28,000
e.
Failed to record purchase on account;
40,000
merchandise properly included in ending
inventory
f.
3,000
4,000
Failed to recognize unused supplies at the end
of the accounting period
8-
60,000
Failed to recognize gain on sale of land; Land
credited for amount of proceeds.
h.
5,000
9,000
Failed to recognize unearned revenue at end
of accounting period.
П
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