Kentucky Enterprises purchased a machine on January 2, 2019, at a cost of P120,000. An additional P50,000 was spent for installation, but this amount was charged erroneously to repairs expense. The machine has a useful life of five years and a residual amount of P20,000. As a result of the error, O 2019 income was understated by P50,000. O Retained carnings at December 31, 2020, was understated by P30.000 and 2020 income was overstated by P10.00. O Retained earnings at December 31, 2020, was understated by P30,00 and 2020 income was overstated by P6.00O. O Retained earnings at December 31, 2020, was understated by P38,000 and 2020 incomc was overstated by P6.00.
Kentucky Enterprises purchased a machine on January 2, 2019, at a cost of P120,000. An additional P50,000 was spent for installation, but this amount was charged erroneously to repairs expense. The machine has a useful life of five years and a residual amount of P20,000. As a result of the error, O 2019 income was understated by P50,000. O Retained carnings at December 31, 2020, was understated by P30.000 and 2020 income was overstated by P10.00. O Retained earnings at December 31, 2020, was understated by P30,00 and 2020 income was overstated by P6.00O. O Retained earnings at December 31, 2020, was understated by P38,000 and 2020 incomc was overstated by P6.00.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Kentucky Enterprises purchased a machine on January 2, 2019, at a cost of P120.000. An additional P50,000 was spent for installation, but this amount was charged
erroneously to repairs expense. The machine has a useful life of ive years and a residual amount of P20,000. As a result of the error,
o 2019 income was understated by P50.000,
O Retained carnings at December 31, 2020. was understated by P30.000 and 2020 income was overstated by P10,000.
O Retained camings at December 31, 2020, was understated by P30,000 and 2020 income was overstated by P6.000.
O Retained earnings at December 31, 2020, was understated by P38,000 and 2020 income was overstated by P6,000.
Transcribed Image Text:Mactan Company's statements for 2018 and 2019 included the following errors:
12/31/18 inventory understated P2,000,000
12/31/19 inventory overstated
1,000,000
Depreciation for 2018 understated
400,000
Depreciation for 2019 overstated
800,000
How much should retained carnings be retroactively adjusted on January 1. 2020?
O 600.000 increase
0 1400.000 increase
1400,000 decrease
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