our auditing firm was engaged by Apple company to review their accounting records and books and based thereon, submit corrected financial statements. The books of accounts are in agreement with the following balance sheet: Apple Corporation Balance Sheet December 31, 2020 Assets Cash P40,000 Accounts receivable 80,000 Notes receivable 24,000 Inventories 200,000 Total assets 344,000 Liabilities and owner’s equity Accounts payable P16,000 Notes payable 32,000 Capital stock 80,000 Retained earnings 216,000 Total liabilities and owner’s equity 344,000 The further review of the company's books indicated that following omissions and errors had not been corrected during the applicable years 2017 2018 2019 2020 Ending inventory overstated - P56,000 P64,000 - Ending inventory understated P48,000 - - P72,000 Prepaid expense 7,200 5,600 4,000 4,800 Unearned income - 3,200 - 2,400 Accrued expense 1,600 600 800 400 Accrued income - 1,000 - 1,200 No dividends were declared during the years 2017 two 2020 and no adjustments were made to retained earnings. The company's books reported the following net income: 2017 2018 2019 2020 Net income P60,000 P44,000 P52,000 P60,000 QUESTIONS: Considering the above audit findings, determine the adjusted amounts of the following 1. Net income in 2017 2. Net income or loss in 2018 3. Net income or loss in 2019 4. Net income or loss in 2020 5. Retained earnings on December 31, 2020
Your auditing firm was engaged by Apple company to review their accounting records and books and based thereon, submit corrected financial statements. The books of accounts are in agreement with the following
|
Apple Corporation |
|
|
Balance Sheet |
|
|
December 31, 2020 |
|
|
Assets |
|
|
Cash |
P40,000 |
|
|
80,000 |
|
Notes receivable |
24,000 |
|
Inventories |
200,000 |
|
Total assets |
344,000 |
|
Liabilities and owner’s equity |
|
|
Accounts payable |
P16,000 |
|
Notes payable |
32,000 |
|
Capital stock |
80,000 |
|
|
216,000 |
|
Total liabilities and owner’s equity |
344,000 |
The further review of the company's books indicated that following omissions and errors had not been corrected during the applicable years
|
|
2017 |
2018 |
2019 |
2020 |
|
Ending inventory overstated |
- |
P56,000 |
P64,000 |
- |
|
Ending inventory understated |
P48,000 |
- |
- |
P72,000 |
|
Prepaid expense |
7,200 |
5,600 |
4,000 |
4,800 |
|
Unearned income |
- |
3,200 |
- |
2,400 |
|
Accrued expense |
1,600 |
600 |
800 |
400 |
|
Accrued income |
- |
1,000 |
- |
1,200 |
No dividends were declared during the years 2017 two 2020 and no adjustments were made to retained earnings. The company's books reported the following net income:
|
|
2017 |
2018 |
2019 |
2020 |
|
Net income |
P60,000 |
P44,000 |
P52,000 |
P60,000 |
QUESTIONS:
Considering the above audit findings, determine the adjusted amounts of the following
1. Net income in 2017
2. Net income or loss in 2018
3. Net income or loss in 2019
4. Net income or loss in 2020
5. Retained earnings on December 31, 2020
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