On December 31, 2019, Ana Inc. sold merchandise for P750,000 to Ysa Inc. The terms of the sales were net 30, FOB shipping point. The merchandise was shipped on December 31, 2019, and arrived at Ysa Inc. on January 5, 2020. Due to a clerical error, the sale was not recorded until January 2020 and the merchandise sold at a 25% markup on cost was included in inventory on December 31, 2019. What was the net effect of the errors on retained earnings? (A) no effect (B understated by 1,350,000 understated by 150,000 (D overstated by 150,000

On December 31, 2019, Ana Inc. sold merchandise for P750,000 to Ysa Inc. The terms of the sales were net 30, FOB shipping point. The merchandise was shipped on December 31, 2019, and arrived at Ysa Inc. on January 5, 2020. Due to a clerical error, the sale was not recorded until January 2020 and the merchandise sold at a 25% markup on cost was included in inventory on December 31, 2019. What was the net effect of the errors on retained earnings? (A) no effect (B understated by 1,350,000 understated by 150,000 (D overstated by 150,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On December 31, 2019, Ana Inc. sold merchandise for P750,000 to Ysa Inc. The terms of the sales were net 30, FOB
shipping point.
The merchandise was shipped on December 31, 2019, and arrived at Ysa Inc. on January 5, 2020.
Due to a clerical error, the sale was not recorded until January 2020 and the merchandise sold at a 25% markup on cost
was included in inventory on December 31, 2019.
What was the net effect of the errors on retained earnings?
A no effect
B understated by 1,350,000
C) understated by 150,000
overstated by 150,000

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