How would this be recorded on an Income Statement. During 2019, Natural State's CFO noticed that bad debt expense in the 2018 income statement was $50,000 too low as a result of an accounting error made by a Natural State employee in the prior year

How would this be recorded on an Income Statement. During 2019, Natural State's CFO noticed that bad debt expense in the 2018 income statement was $50,000 too low as a result of an accounting error made by a Natural State employee in the prior year

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter14: Taxes On The Financial Statements

Section: Chapter Questions

Problem 20CE

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Penn Co.'s allowance for uncollectible accounts was $200,000 at the end of 2019 and $180,000 at the end of 2018. For the year ended December 31, 2019, Penn reported bad debt expense of $40,000 in its income statement. What amount did Penn debit to the appropriate account in 2019 to write off actual bad debts?
your client, failed to record accrued salaries expense of P 50,000 as of December 31, 2022. Based on the foregoing, answer the following questions: Question 1: Which of the following accounts is(are) understated by P 50,000 at the end of year 2022 as a result of the error? Question 2: Which of the following accounts is(are) overstated by P 50,000 at the end of year 2023 as a result of the error? Question 3: What would be the adjusting entry if the error is discovered in year 2022? Question 4: What would be the adjusting entry if the error is discovered in year 2023? Question 5: What would be the adjusting entry if the error is discovered in year 2024?
During 2020, Wagner Converting discovers that a computational error was made on its 2019 financial statements. The error resulted in a $150,000 understatement of 2019 net income. Upon discovering the error, Wagner's accountant promptly adds $150,000 to the company's 2020 beginning Retained Earnings balance. What impact will this have on Wagner's Retained Earnings and why will it have that impact? O It will correctly raise Retained Earnings because the error should affect the Retained Earnings account, not an income account. O It will incorrectly raise Retained Earnings because an error that impacts income must always be corrected in an income statement account. O It will correctly raise Retained Earnings; however the error should first be recorded to Income Summary which is then posted to Retained Earnings. O It will incorrectly raise Retained Earnings because such errors must be recorded to the year in which they were made, not the year in which they were discovered.
Since it started its operations in 2019, Valdo Co. carried no allowance for doubtful accounts. Uncollectible receivables were expensed as written off and recoveries were credited to income as collected. On March 1, 2023(after the financial statements were issued), management recognized that Valdo accounting policy with respect to doubtful accounts was not correct, and determined that an allowance for doubtful accounts was necessary. Data for the five years follow: 2019 2020 2021 2022 2023 Credit sales 2,100,000 1,850,000 2,050,000 2,000,000 2,000,000 Accounts written off 20,000 40,000 130,000 22,000 113,000 The year-end balance of accounts receivable are as follows: December 31, 2022 - P1,000,000 December 31, 2023 P1,200,000 Recoveries 15,000 20,000 5,000 20,000 40,000 Bad debts are provided for as a percentage of sales. a) The percentage to be used to compute for the allowance for bad debts on December 31, 2023 would be b) How much would be the doubtful accounts expense for 2023? c)…
1. What is the effect of the errors to the Retained Earnings at the beginning of 2019? 2. What is the effect of the errors to the Retained Earnings at the end of 2019?
In 2021, Winslow International, Inc.’s controller discovered that ending inventories for 2019 and 2020 were overstated by $220,000 and $520,000, respectively.Determine the effect of the errors on retained earnings at January 1, 2021. (Ignore income taxes.)
The Richards Company paid for a five-year extended warranty on all of their equipment on March 1, 2019 costing $540,000 that went into effect immediately. The fiscal year is the calendar year. what if Richards mistakenly or purposely charged the entire total as an expense in 2019? Assuming that all other accounting during the year had been performed correctly, i.e. in a consistent manner under GAAP (Generally Accepted Accounting Principles), in what ways would this error affect overall totals for 2019 of the six items below. No dollar figures are required in this table. Just place one check mark in each column to identify the impact of this misclassification on that category. Impact On Reported Figures For 2019 if the total payment had been expensed when paid. (Place One Check Mark in Each Column Below) Owners' Assets Liabilities Equity (Retained Earnings) Impact Revenues Expenses Income Overstated Understated No Effect
Lara Croft has been hired as a new auditor for Jolie Inc. Ms. Croft has suggested thefollowing accounting changes in regards to the company’s financial statements.1. At December 31, 2019, Jolie Inc. had a receivable of $500,000 from Relic Inc. on itsstatement of financial position. Relic had gone bankrupt, and no recovery is expected.Jolie proposes to write off the receivable as a prior period item.2. The client proposes the following changes in depreciation policies. (a) For officefurniture and fixtures, it proposes to change from a 10-year useful life to an 8-yearlife. If this change had been made in prior years, retained earnings at December 31, 2019,would have been $250,000 less. The effect of the change on 2020 income alone is areduction of $60,000.(b) For its equipment in the leasing division, the client proposes to adopt the sum-of-theyears’-digits depreciation method. The client had never used SYD before. The first yearthe client operated a leasing division was 2020. If…
e. Assuming the company closes its books on December 31st, prepare the journal entries for 12/31/19 and 1/1/20. g. Assuming the error was discovered at the end of 2019 but before closing the books, prepare the necessary journal entry(ies) to correct the error.
Lowell Corporation has used the accrual basis of accounting for several years. A review of the records, however, indicates that some expenses and revenues have been handled on a cash basis because of errors made by an inexperienced bookkeeper. Income statements prepared by the bookkeeper reported $29,000 net income for 2019 and $37,000 net income for 2020. Further examination of the records reveals that the following items were handled improperly. 1. Rent was received from a tenant in December 2019. The amount, $1,000, was recorded as revenue at that time even though the rental pertained to 2020. 2. Salaries and wages payable on December 31 have been consistently omitted from the records of that date and have been entered as expenses when paid in the following year. The amounts of the accruals recorded in this manner were: December 31, 2018 $1,100 December 31, 2019 1,200 December 31, 2020 940 3. Invoices for supplies purchased have been charged to expense…
Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company’s fiscal year-end. The 2020 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $39,000 $ 477,000 During 2021, credit sales were $1,795,000, cash collections from customers $1,875,000, and $44,000 in accounts receivable were written off. In addition, $3,900 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following: Percentage of Year-End Percent Age Group Receivables in Group Uncollectible 0−60 days 70 % 5 % 61−90 days 20 15 91−120 days 5 20 Over 120 days 5 40 Required:1. Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previously written off.2. Prepare the year-end…
Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company’s fiscal year-end. The 2020 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $44,000 $ 502,000 During 2021, credit sales were $1,820,000, cash collections from customers $1,900,000, and $53,000 in accounts receivable were written off. In addition, $4,400 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following: Percentage of Year-End Percent Age Group Receivables in Group Uncollectible 0−60 days 65 % 4 % 61−90 days 15 10 91−120 days 15 30 Over 120 days 5 50 Required:1. Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previously written off.2. Prepare the…