In the 2021 financial statements, what is the pretax adjustment to retained earnings on January 1, 2021?
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- Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800An entity reported net income of P1,500,000, P1,800,000, and P2,200,000 for the years 2019, 2020, and 2021. However, the following errors were detected and were not yet corrected:· 2019 ending inventory is overstated by P60,000.· 2020 beginning inventory is overstated by P60,000.· A prepayment for an insurance policy for three years amounting to P90,000 was expensed in full in 2020.How much is the correct 2021 net income?After the issuance of the 2021 financial statements, Pine Company discovered a computational error of P150,000 in the calculation of the December 31, 2021 inventory. The error resulted in a P150,000 overstatement in the cost of goods sold for the year ended December 31, 2021. In October 2022, the entity paid the amount of P500,000 in settlement of litigation instituted against it during 2021. No provision for this possible loss was made in 2021. The income tax rate is 30%. What adjustment is required to restate retained earnings on January 1, 2021?
- After the issuance of the 2021 financial statements, Pine Company discovered a computationalerror of P150,000 in the calculation of the December 31, 2021 inventory. The error resulted in a P150,000 overstatement in the cost of goods sold for the year endedDecember 31, 2021. In October 2022, the entity paid the amount of P500,000 in settlement of litigation instituted againstit during 2021. No provision for this possible loss was made in 2021. The income tax rate is 30%.What adjustment is required to restate retained earnings on January 1, 2022? A. Dr. Inventory 150000 Cr. Retained earnings 105,000 Cr. Income tax Payable 45,000 B. Dr. Inventory 150,000 Cr. Retained Earnings 150,000 C. Dr. Inventory 150,000 Cr. Retained Earnings 150,000 Dr. Litigation loss 500,000 Cr. Cash 500,000An entity reported the following events during 2020: It was decided to write-off P800,000 of obsolete inventory. A counting error relating to the inventory on December 31, 2019 was discovered. This required a reduction in the carrying amount of inventory at that date of P300,000. Sales of P600,000 had been omitted from the financial statements for the year ended December 31, 2019. The provision for uncollectible accounts receivable on December 31, 2019 was P300,000. During 2020, P500,000 was written off the December 31, 2019 accounts receivable. What pretax total amount should be reported as prior period errors in 2020?During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts: 2019 understated by $ 142,000 2020 overstated by 194,000 WMC uses the periodic inventory system and the FIFO cost method. Required:1-a. Determine the effect of 2019 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.)1-b. Determine the effect of 2020 errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.)2. Prepare a journal entry to correct the error in 2021.3. Will WMC account for the error (a) retrospectively or (b) prospectively? a. & b. are attached images c. & d. are below (they are short please please answer) c. Record correction of error journal entry form. d. Will WMC account for the error (a) retrospectively or (b) prospectively?
- During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts:2019 understated by $120,0002020 overstated by 150,000WMC uses the periodic inventory system and the FIFO cost method.Required:1. Determine the effect of these errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.)2. Prepare a journal entry to correct the error in 2021.3. Will WMC account for the error (a) retrospectively or (b) prospectively?Assume that in 2021, Graham Company discovered that December 31, 2019 inventory was overstated. Discuss the impact that this error would have had on 2019 net income, 2020 net income and the combined net income of the two years.During 2021, P Company discovered that the ending inventories reported on its financial statements were incorrect by the following amounts: 2019 $ 120,000 understated 2020 $ 150,000 overstated *Note any error of 2019 ending inventory is carried over to 2020 as an error of the beginning inventory. P uses the periodic inventory system to ascertain year-end quantities that are converted to dollar amounts using the FIFO cost method. Prior to any adjustments for these errors and ignoring income taxes, P's retained earnings at January 1, 2021, would be: O Correct. O $30,000 overstated O $150,000 overstated. O $270,000 overstated.
- On December 31, 2021, an entity experienced a decline in the value of inventory resulting in a writedown from P4,000,000 cost to P3,500,000 net realizable value. The entity used the allowance method to record the necessary adjustment. In 2022, market conditions have improved dramatically. On December 31, 2022, the inventory had a cost of P5,000,000 and net realizable value of P4,800,000. The entity made purchases of P20,000,000 in 2022. What amount should be reported as cost of goods sold in 2022? * a. 19,000,000 O b. 19,300,000 c. 18,700,000 O d. 24,000,000(S) porins) An audit of Antwren revealed four errors that were made but never corrected. In 2021, ending inventory was overstated by $201, 000 and depreciation was overstated by $44,000. In 2022, nding inventory was understated by $111, 000 and wages expens as understated by $86, 000. What effect did these errors have 0 htwren's 2022 net income? (RE&CF 6) understated by $226, 000 overstated by $132, 000 pverstated by $157,000 inderstated by $25,000During 2024, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts: 2022 understated by 2023 overstated by $ 127,000 157,000 WMC uses a periodic inventory system and the FIFO cost method. Required: 1. Determine the effect of these errors on retained earnings at January 1, 2024, before any adjustments @gnore income taxes 2. Prepare a journal entry to correct the errors Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the effect of these errors on retained earnings at January 1, 2024, before any adjustments. (fonare income tas) Retened samimgs would be Required 2 >