Problem 15-23 (PHILCPA Adapted)Malampaya Company showed income before income tax of P6, 500,000 on December 31, 2014.The year-end verification of the transactions revealed the following errors: P1, 000,000 worth of merchandise was purchased in 2014 and included in the endinginventory. However, the purchase was recorded only in 2015. A merchandise shipment valued at P1, 500,000 was properly recorded as purchase atyear-end. Since the merchandise was still at the port area, it was inadvertently omittedfrom the inventory on December 31, 2014. Advertising for December 2014, amounting to P500, 000, was recorded when paymentwas made in January, 2015. Rent of P300, 000 on an equipment applicable for six months was received on November1, 2014. The entire amount was reported as income upon receipt. Insurance premium covering the period from July 1, 2014 to July 1, 2015, amounting toP200, 000 was paid and recorded as expense on July 31, 2014. The entity did not makeany adjustment at the end of the year. What is the corrected income before tax for 2014? a.6,900,000 b.6,400,000 c.6,500,000 d.6,300,000
Problem 15-23 (PHILCPA Adapted)Malampaya Company showed income before income tax of P6, 500,000 on December 31, 2014.The year-end verification of the transactions revealed the following errors:
P1, 000,000 worth of merchandise was purchased in 2014 and included in the endinginventory. However, the purchase was recorded only in 2015.
A merchandise shipment valued at P1, 500,000 was properly recorded as purchase atyear-end. Since the merchandise was still at the port area, it was inadvertently omittedfrom the inventory on December 31, 2014.
Advertising for December 2014, amounting to P500, 000, was recorded when paymentwas made in January, 2015.
Rent of P300, 000 on an equipment applicable for six months was received on November1, 2014. The entire amount was reported as income upon receipt.
Insurance premium covering the period from July 1, 2014 to July 1, 2015, amounting toP200, 000 was paid and recorded as expense on July 31, 2014. The entity did not makeany adjustment at the end of the year.
What is the corrected income before tax for 2014?
a.6,900,000 b.6,400,000 c.6,500,000 d.6,300,000
Step by step
Solved in 2 steps
