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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Answered: Jason Co. began operations on January…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 14EA: If Wakowski Companys ending inventory was actually $86,000 but was adjusted at year end to a balance...

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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?
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
Rr.22.
Cromwell Company began operations on January 1, 20x1. Financial statements for the years ended December 31, 20x1 and 20x2 contained the following errors:20x1 20x2Ending inventory P320,000 understated P300,000 overstatedDepreciation expense 120,000 understatedInsurance expense 200,000 overstated 200,000 understatedPrepaid insurance 100,000 understatedThe reported net income for 20x1 is P648,000 and P894,000 for 20x2. In addition, on December 31, 20x2, a fully depreciated machinery was sold for P216,000 cash, but the sale was not recorded until 20x3. There were no other errors during 20x1 and 20x2, and no corrections have been made for any of the errors. Ignore income tax effects.REQUIRED: Compute the total effects of errors and indicate whether overstated or understated.5. Total effect of the errors on Elizabeth’s 20x1 net income _____________6. Total effect of the errors on Elizabeth’s 20x2 net income _____________7. Total effect of the errors on Elizabeth’s working capital on December…
(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.
Sheridan Tool Company’s December 31 year-end financial statements contained the following errors. December 31, 2020 December 31, 2021 Ending inventory $9,600 understated $7,600 overstated Depreciation expense $2,100 understated — An insurance premium of $62,100 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 $16,300 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 of errors on net income $Enter the total effect of errors on net income in dollars (b) Compute the total effect of the errors on the amount of Sheridan’s working capital…
PLease show the complete solution Cromwell Company began operations on January 1, 20x1. Financial statements for the years ended December 31, 20x1 and 20x2 contained the following errors: 20x1 20x2 Ending inventory P320,000 understated P300,000 overstated Depreciation expense 120,000 understated Insurance expense 200,000 overstated 200,000 understated Prepaid insurance 100,000 understated The reported net income for 20x1 is P648,000 and P894,000 for 20x2. In addition, on December 31, 20x2, a fully depreciated machinery was sold for P216,000 cash, but the sale was not recorded until 20x3. There were no other errors during 20x1 and 20x2, and no corrections have been made for any of the errors. Ignore income tax effects. REQUIRED: Compute the total effects of errors and indicate whether overstated or understated. Total effect of the errors on Elizabeth’s 20x1 net income Total effect of the errors on Elizabeth’s 20x2 net income Total effect…
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?
Buffalo Tool Company’s December 31 year-end financial statements contained the following errors. December 31, 2020 December 31, 2021 Ending inventory $9,100 understated $7,800 overstated Depreciation expense $2,300 understated — An insurance premium of $67,200 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 $13,700 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 of errors on net income $Enter the total effect of errors on net income in dollars (b) Compute the total effect of the errors on the amount of Buffalo’s working capital at…
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…
A 105.

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