In examining the books of Ula Company, you found out that certain adjustments had been overlooked at the end of 2019 and 2020. You also discovered that other items had been improperly recorded. These omissions and other failures for each year are summarized below: 1231/20 12/31/19. P780,000 P873,600 213,000 Salaries payable Interest receivable Prepaid insurance Advances from customers (Collections from customers had been recorded as sales but should have been recognized as advances from customers because goods were not shipped until the following year) 259,200 384,000 561,000 470,400 307,800 Machinery (Capital expenditures had been recorded as repairs but should have been charged to Machinery; the depreciation rate is 10% per year, but depreciation in the year of expenditure is to be recognized at 5%) 522,000 564,000 Required: Compute for the total effect of errors in the net income of 2019 and 2020.

In examining the books of Ula Company, you found out that certain adjustments had been overlooked at the end of 2019 and 2020. You also discovered that other items had been improperly recorded. These omissions and other failures for each year are summarized below: 1231/20 12/31/19. P780,000 P873,600 213,000 Salaries payable Interest receivable Prepaid insurance Advances from customers (Collections from customers had been recorded as sales but should have been recognized as advances from customers because goods were not shipped until the following year) 259,200 384,000 561,000 470,400 307,800 Machinery (Capital expenditures had been recorded as repairs but should have been charged to Machinery; the depreciation rate is 10% per year, but depreciation in the year of expenditure is to be recognized at 5%) 522,000 564,000 Required: Compute for the total effect of errors in the net income of 2019 and 2020.

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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