Jason Co. began operations on January 1, 2023. Financial statements for 2023 and 2024 contained the following errors:Ending inventoryDepreciation expenseDec. 31, 2023$75,500 overstated48,500 understatedDec. 31, 2024$105,500 overstatedAccumulated depreciation.48,500 understated48,500 understatedInsurance expense43,500 overstated43,500 understatedPrepaid expense43,500 understatedIn addition, on December 26, 2024, fully depreciated equipment was sold for $58,000, but the sale was not recorded until 2025. Nocorrections have been made for any of the errors.Ignoring income taxes, calculate the total effect of the errors on 2024 net income.Total effect of the errors on 2024 net income$

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Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 59E: Effects of an Error in Ending Inventory Waymire Company prepared the partial income statements...

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Aljohn Company's year-end financial statements contained the following errors: 12.31.2021 12.31.2022 Ending inventory P95,000 understated P800,000 overstated Depreciation P250,000 understated An insurance premium of P600,000 was prepaid in 2021 covering the years 2021, 2022, and 2023. The entire amount was charged to expense in 2021. In addition, on December 31, 2022, fully depreciated machinery was sold for P150,000 cash, but the entry was not recorded until 2022. No corrections have been made for any of the errors. Ignore income tax. What was the total effect of the errors on retained earnings on December 31, 2022?
Bonghill Company’s December 31 year-end financial statements had the following error: December 31, 2019 December 31, 2020 Ending Inventory P13,500 understated P19,800 overstated Depreciation expense 3,600 understated - Unearned rental 5,000 understated - Prepaid insurance - 8,000 understated There were no other errors during the years 2019 or 2020 and no corrections have been made for any of the errors. (Ignore income tax considerations) What is the net effect of the errors in Bonghill’s December 31, 2020 accumulated profits balance? A.Understated by P20,300 B.verstated by P11,800 C.Overstated by P20,300 D.Overstated by P15,400
What is the net effect of the errors in FIERY’s December 31 retained earnings balance? A. Overstated by ₱ 15,400 B. Overstated by ₱ 11,800 C. Understated by ₱ 20,300 D. Overstated by ₱ 20,300
(Error Analysis) Peter Henning Tool Company’s December 31 year-end financial statements contained the following errors. December 31, 2017 December 31, 2018 Ending inventory $9,600 understated $8,100 overstated Depreciation expense $2,300 understated — An insurance premium of $66,000 was prepaid in 2017 covering the years 2017, 2018, and 2019. The entire amount was charged to expense in 2017. In addition, on December 31, 2018, fully depreciated machinery was sold for $15,000 cash, but the entry was not recorded until 2019. There were no other errors during 2017 or 2018, and no corrections have been made for any of the errors. (Ignore income tax considerations.)Instructions(a) Compute the total effect of the errors on 2018 net income.(b) Compute the total effect of the errors on the amount of Henning’s working capital at December 31, 2018.(c) Compute the total effect of the errors on the balance of Henning’s retained earnings at December 31, 2018.
What is the effect of the foregoing errors (overstatement) on total assets ar December 31, 2025?
Bonghill Company’s December 31 year-end financial statements had the following error: December 31, 2019 December 31, 2020 Ending Inventory 13,500 understated 19,800 overstated Depreciation expense 3,600 understated - Unearned rental 5,000 understated - Prepaid insurance - 8,000 understated There were no other errors during the years 2019 or 2020 and no corrections have been made for any of the errors. (Ignore income tax considerations) What is the net effect of the errors in Bonghill’s December 31, 2020 accumulated profits balance?
Requirements: a. What are the net effects of the errors on Rodney's 20x1 and 20x2 profit or loss, repesctively? b. What is the effect of the errors on Rodney's December 31, 20x2 retained earnings?
Teal Tool Company's December 31 year-end financial statements contained the following errors. Ending inventory Depreciation expense December 31, 2020 $10,500 understated $2,400 understated Total effect of errors on net income $ An insurance premium of $69,000 was prepaid in 2020 covering the years 2020, 2021, and 2022. The entire amount was charged to expense in 2020. In addition, on December 31, 2021, fully depreciated machinery was sold for $16,000 cash, but the entry was not recorded until 2022. There were no other errors during 2020 or 2021, and no corrections have been made for any of the errors. (Ignore income tax considerations.) (a) Compute the total effect of the errors on 2021 net income. Total effect on working capital $ December 31, 2021 understated overstated (b) Compute the total effect of the errors on the amount of Teal's working capital at December 31, 2021. $8,200 overstated Total effect on retained earnings (c) Compute the total effect of the errors on the balance of…
What is the effect of the foregoing errors (overstatement) on total assets at december 31,2025?
Shockley Co. reported the following amounts in its financial statements: (a) Cost of goods sold (b) Profit (c) Total current assets (d) Equity a. Cost of goods sold: Reported Adjustments: Dec. 31, 2020 error Dec. 31, 2021 error In making the physical counts of inventory, the following errors were made: • Inventory on December 31, 2020: understated $80,000 • Inventory on December 31, 2021: overstated $22,000 Corrected b. Profit: Required: For each of the preceding financial statement items-(a), (b), (c), and (d)-prepare a schedule similar to the following and show the adjustments that would have been necessary to correct the reported amounts. (Negative answers should be indicated by a min sign.) Reported Adiustments: Dec. 31. 2020 error $ $ $ $ 2020 Financial Statements for Year Ended December 31. 2022 820,000 281,000 2020 2021 765,000 $ 897,000 $ 270,000 325,000 1,255,000 1,365,000 1,387,000 1,530,000 270,000 $ 80.0001 2021 1,200,000 1,332,000 2022 765,000 $ 897,000 $ 820,000 (80,000)…
PROBLEM 1: Identifying effects of common errors Requirement: Complete the schedule below by entering an Q to indicate overstatement, a I to indicate understatement, and NE if no effect. Effect of Error On: Net income Assets Liabilities Capital a. Ending inventory for 2020 understated: 2020 financial statements 2021 financial statements b. Ending inventory for 2021 overstated: 2020 financial statements 2021 financial statements c. Failed to record depreciation in 2020: 2020 financial statements 2021 financial statements d. Failed to record accrued salaries payable in 2020: 2020 financial statements 2021 financial statements e. Overstatement of accrued rent revenue in 2020: 2020 financial statements 2021 financial statements f. Failed to record a liability resulting from revenue collected in advance at end of 2020; instead, credited revenue in full erroneously: 2020 financial statements 2021 financial statements g. Failed to record an asset resulting from expenses paid in advance at end…
The 2022 and 2023 financial statements of Marigold Inc. contained the following errors: Ending Inventory Insurance Expense O 2022 $24840 understated $13640 overstated $13640 understated $30040 understated $10400 overstated 5200 understated 2023 $16640 understated Assuming that none of the errors were detected or corrected, by what amount will 2023 income before taxes be overstated or understated? 3000 overstated

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