Problem 16-1 (IAA) Roxas Company reported the following net income: 2020 2021 1,750,000 2,000,000 An examination of the accounting records for the year ended December 31, 2021 revealed that several errors were made. The following errors were discovered: Salary accrued at year-end was consistently omitted: 2020 2021 100,000 140,000 The footings and extensions showed that the inventory on December 31, 2020 was overstated by P190,000. Prepaid insurance of P120,000 applicable to 2022 was expensed in 2021. Interest receivable of P20,000 was not recorded on December 31, 2021. On January 1, 2021 an equipment costing P400,000 was sold or P220,000. At the date of sale, the equipment had ccumulated depreciation of P240,000. he cash received was recorded as miscellaneous income in 021.
Problem 16-1 (IAA) Roxas Company reported the following net income: 2020 2021 1,750,000 2,000,000 An examination of the accounting records for the year ended December 31, 2021 revealed that several errors were made. The following errors were discovered: Salary accrued at year-end was consistently omitted: 2020 2021 100,000 140,000 The footings and extensions showed that the inventory on December 31, 2020 was overstated by P190,000. Prepaid insurance of P120,000 applicable to 2022 was expensed in 2021. Interest receivable of P20,000 was not recorded on December 31, 2021. On January 1, 2021 an equipment costing P400,000 was sold or P220,000. At the date of sale, the equipment had ccumulated depreciation of P240,000. he cash received was recorded as miscellaneous income in 021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 16-1 (IAA)
Roxas Company reported the following net income:
2020
2021
1,750,000
2,000,000
An examination of the accounting records for the year ended
December 31, 2021 revealed that several errors were made.
The following errors were discovered:
Salary accrued at year-end was consistently omitted:
2020
2021
100,000
140,000
The footings and extensions showed that the inventory on
December 31, 2020 was overstated by P190,000.
Prepaid insurance of P120,000 applicable to 2022 was
expensed in 2021.
Interest receivable of P20,000 was not recorded on December
31, 2021.
On January 1, 2021 an equipment costing P400,000 was sold
for P220,000. At the date of sale, the equipment had
accumulated depreciation of P240,000.
The cash received was recorded as miscellaneous income in
2021.
In addition, depreciation was recorded for the equipment
for 2021 at the rate of 10%.
Required:
a. Prepare worksheet showing corrected net income for
2020 and 2021.
b. Prepare adjusting entries on December 31, 2021:
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