Items 9 through 11 are based on the following information:9. The Vitality Company showed pre-tax income of P2,500,000 for the year endedDecember 31, 2018. On your year-end verification of the transactions of theCompany, you discovered the following errors:P1,000,000 worth of merchandise was purchased in 2018 and included in theending inventory. However, the purchase was recorded only in 2019. A merchandise shipment valued at P1,500,000 was properly recorded aspurchases at year end. The merchandise was inadvertently omitted from thephysical count, since it has not arrived by December 31, 2018.Value added tax for the fourth quarter of 2018, amounting to P500,000, wasincluded in the Sales account.Rental of P300,000 on an equipment, applicable for six months, was receivedon November 1, 2018. The entire amount was reported as revenue uponreceipt.Rent paid on building covering the period from July 1, 2018 to July 1, 2019,amounting to P1,200,000, was paid and recorded as expense on July 1, 2018.The company did not make any adjustment at the end of the year.The corrected pre-tax profit for 2018 should beA. P2,400,000.B. P2,900,000.C. P3,000,000.D. P3,400,000.10. What is the net effect of the foregoing errors on the total assets at December31, 2018?A. P600,000 understatedB. P1,100,000 understatedC. P1,500,000 understatedD. P2,100,000 understated11. What is the total understatement of the total liabilities at December 31, 20182A. P3,200,000B. P1,700,000C. P1,500,000D. P1,200,000

In the above question we are given pre tax income of Vitality Company for the year ended 2018 before…

Items 9 through 11 are based on the following information: 9. The Vitality Company showed pre-tax income of P2,500,000 for the year ended December 31, 2018. On your year-end verification of the transactions of the Company, you discovered the following errors: P1,000,000 worth of merchandise was purchased in 2018 and included in the ending inventory. However, the purchase was recorded only in 2019.

Items 9 through 11 are based on the following information: 9. The Vitality Company showed pre-tax income of P2,500,000 for the year ended December 31, 2018. On your year-end verification of the transactions of the Company, you discovered the following errors: P1,000,000 worth of merchandise was purchased in 2018 and included in the ending inventory. However, the purchase was recorded only in 2019.

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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