Homework Help is Here – Start Your Trial Now!
Business
Accounting
O none of the choices O Understated by P301.800 O Overstated by P119,400 O Overstated by P820,200 O Understated by P265,.800

O none of the choices O Understated by P301.800 O Overstated by P119,400 O Overstated by P820,200 O Understated by P265,.800

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

9

You were engaged by DIANE Company to audit its financial statements for the first time. In examining the books, you noted that certain adjustments had been overlooked at the end of 2020 and 2021. You also discovered that other items had been improperly recorded. These omissions and other errors for each year were summarized: 12-31- 2021 12-31- 2020 Salaries Payable 780,000 873,600 Interest Receivable 213,000 259,200 Prepaid Insurance 307,800 384,000 Advances from Customers 561.000 470,400 (Collections from customers had been recorded as soles but should have been recognized as advances from customers becouse goods were not shipped until the following year) Machinery 522,000 564,000 (Copital expenditures had been recorded as repairs but should have been charged to Machinery, the depreciation rate is 10% per year. but depreciation in the year of expenditure is to be recognized at 5%)
Transcribed Image Text:You were engaged by DIANE Company to audit its financial statements for the first time. In examining the books, you noted that certain adjustments had been overlooked at the end of 2020 and 2021. You also discovered that other items had been improperly recorded. These omissions and other errors for each year were summarized: 12-31- 2021 12-31- 2020 Salaries Payable 780,000 873,600 Interest Receivable 213,000 259,200 Prepaid Insurance 307,800 384,000 Advances from Customers 561.000 470,400 (Collections from customers had been recorded as soles but should have been recognized as advances from customers becouse goods were not shipped until the following year) Machinery 522,000 564,000 (Copital expenditures had been recorded as repairs but should have been charged to Machinery, the depreciation rate is 10% per year. but depreciation in the year of expenditure is to be recognized at 5%)
What is the total effect of the errors on the company's working capital at 12-31-2021? O none of the choices O Understated by P301.800 O Overstated by P119.400 O Overstated by P820,200 O Understated by P265,800
Transcribed Image Text:What is the total effect of the errors on the company's working capital at 12-31-2021? O none of the choices O Understated by P301.800 O Overstated by P119.400 O Overstated by P820,200 O Understated by P265,800
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS