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

See similar textbooks

Similar questions

Platinum Co. failed to record $72,000 credit purchase of goods that were received on the last day of its fiscal year end. However, it included these goods in the ending inventory. Platinum found this error three months later when the supplier contacted it for payment. If Platinum uses the periodic inventory system, which journal entry should it make to correct this error? Debit Inventory $72,000 and credit Retained Earnings $72,000. Debit Retained Earnings $72,000 and credit Accounts payable $72,000. Debit Retained Earnings $72,000 and credit Inventory $72,000. Debit Inventory $72,000 and credit Accounts Payable $72,000.
An entry to record Purchases and related Accounts Payable of \130,000 for merchandise purchased on December 23, 2019, was recorded in January 2020. This merchandise was not included in inventory at December 31, 2019. What effect does this error have on reported net income for 2019? What entry should be made to correct for this error, assuming that the books are not closed for 2019? O a. Accounts Payable.. 130,000 Cash 130,000 Ob. Accounts Payable... 130,000 Purchases 130,000 О с. Purchases 130,000 Accounts Payable 130,000 O d. None of these
Sunland Company uses the FIFO method for internal reporting purposes and LIFO for external reporting purposes. The balance in the LIFO Reserve account at the end of 2020 was $277000. The balance in the same account at the end of 2021 is $419000. Sunland’s Cost of Goods Sold account has a balance of $2110000 from sales transactions recorded during the year. What amount should Sunland report as Cost of Goods Sold in the 2021 income statement?
The income statement of TINKER CORP. shows a net income of P175,000 for the year ended December 31, 2014. Adjustments were made for the following errors: 1 December 31, 2013, inventory overstated by P22,500. 2 December 31, 2014, inventory understated by P37,500. 3 A P10,000 customer's deposit received in December 2014, was credited to sales in 2014. The goods were actually shipped in January 2015. What is the unadjusted net income of Uruguay Co. for the year ended December 31, 2014? А. P234,000 C. P170,000 P125,000 D. P200,000 B.
The Apollo Company conducted a physical count on December 31, 2021 which revealed in inventory with a cost of P4,410,000. The following items were excluded from the physical count: • Merchandise held by Apollo on consignment, P610,000. • Merchandise shipped by Apollo, FOB Destination to a customer on December 31, 2021 and was received by the customer on January 8, 2022, P380,000. • Merchandise shipped by Apollo, FOB Shipping Point to a customer on December 31, 2021 and was received by the customer on January 8, 2022, P460,000. • Merchandise shipped by a vendor, FOB Destination on December 31, 2021 was received by Apollo on January 8, 2022, P830,000. • Merchandise purchased FOB Shipping Point was shipped by the supplier on December 31, 2021 and received by Apollo on January 8, 2022, P510,000. What is the correct amount of inventory on December 31, 2021? P3,800,000 P5,300,000 P4,690,000 O P4,920,000
Lindy Company's auditor discovered two errors. No errors were corrected during 2017. The errors are described as follows: (1.) Merchandise costing $4,200 was sold to a customer for $9,200 on December 31, 2017, but it was recorded as a sale on January 2, 2018. The merchandise was properly excluded from the 2017 ending inventory. Assume the periodic inventory system is used. (2.) A machine with a five-year life was purchased on January 1, 2017. The machine cost $22,000 and has no expected salvage value. No depreciation was taken in 2017 or 2018. Assume the straight-line method for depreciation. Required:Prepare appropriate journal entries (assume the 2018 books have not been closed). Ignore income taxes.
A business A uses periodic inventory system. On Nov 15, 2021, the business A sold merchandise to business B for $149,000 on terms 3/10, 2/20, n/30. On Nov 18, 2021, business B returned to business A goods worth $8,700 due to wrong specification. On Nov 15, 2021, business B made partial payment of $39,000. On Dec 4, 2021, business B paid its account in full. How much should business A credit to Sales Revenue on Nov 15?
5. On December 31, 2020, XYZ's fiscal year end, a physical count of inventory revealed an inventory balance of $80,000. The following items were not yet included in the physical count: i. ii. iii. Merchandise shipped to a customer on 12/28 FOB destination (merchandise arrives at customer's location on 1/5/21) $3,000 Merchandise shipped to a customer on 12/29 FOB shipping point (merchandise arrives at customer's location on 1/2/21) $1,500 Merchandise purchased from a supplier, shipped FOB destination on 12/26, arrives on January 4, 2021 $6,000. Barrington's 2016 ending inventory should be: a. $80,000. b. $89,000. c. $83,000. d. $87,750.
Bell Inc. took a physical inventory at the end of the year and determined that $780k of goods were on hand. In addition, Bell Inc., determined that $60k of goods that were in transit that were shipped F.O.B. shipping point were actually received two days after the inventory count and that the company had $90k of goods out on consignment. What amount should Bell report as inventory at the end of the year? a.) 780k b.) 860k c.) 870k d.) 930k
What is the correct answer to the question? Show solution.
In your audit of James Smith Company, you find that a physical inventory on December 31, 2020, showed merchandise with a cost of $449,390 was on hand at that date. You also discover the following items were all excluded from the $449,390. 1. 2. 3. 4. 5. Merchandise of $61,150 which is held by Smith on consignment. The consignor is the Max Suzuki Company. Merchandise costing $36,420 which was shipped by Smith f.o.b. destination to a customer on December 31, 2020. The customer was expected to receive the merchandise on January 6, 2021. Merchandise costing $47,720 which was shipped by Smith f.o.b. shipping point to a customer on December 29, 2020. The customer was scheduled to receive the merchandise on January 2, 2021. Merchandise costing $83,030 shipped by a vendor f.o.b. destination on December 30, 2020, and received by Smith on January 4, 2021. Merchandise costing $49,200 shipped by a vendor f.o.b. shipping point on December 31, 2020, and received by Smith on January 5, 2021. Based on…
During your examination of the 20x3 financial statements of Goyo Company, the following data were discovered. Give any correcting and adjusting entries called for by the information given. Disregard any effects on income tax. 4. Merchandise costing P12,000 was included in the inventory as of December 31, 20x2, but was not entered in the Purchases account until January 10, 20x3. 5. On July 1, 20x3, a three-year insurance policy was purchased for P7,200. Prepaid expenses did not appear on the December 31, 20x3 statement of financial position. 6. Store supplies inventory had been overlooked in adjusting the accounts in previous years. Store supplies on hand were: 20x1 – P900; 20x2 – P1,800. Store supplies on hand at the end of 20x3 amounted to P2,900.