Problem 3. The accumulated profits of New Era Corporation has a beginning unadjusted balance of P550,000. The errors were discovered as follows: 1) the prepaid expense of P35,000 as of statement of financial position date last yea was not recorded. 2) the prepaid expense as of the end of this year in the amount of P50,000 was also no recorded. 3) the office equipment is overstated last year by P40,000 due to under depreciation. Net Income for the period is P400,000. Required: 1. Journalize the above transactions. 2. Compute the adjusted balance of accumulated profits.

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Problem 3. The accumulated profits of New Era Corporation has a beginning unadjusted
balance of P550,000.
The errors were discovered as follows:
1) the prepaid expense of P35,000 as of statement of financial position date last year
was not recorded.
2) the prepaid expense as of the end of this year in the amount of P50,000 was also not
recorded.
3) the office equipment is overstated last year by P40,000 due to under depreciation.
Net Income for the period is P400,000.
Required:
1. Journalize the above transactions.
2. Compute the adjusted balance of accumulated profits.
Transcribed Image Text:Problem 3. The accumulated profits of New Era Corporation has a beginning unadjusted balance of P550,000. The errors were discovered as follows: 1) the prepaid expense of P35,000 as of statement of financial position date last year was not recorded. 2) the prepaid expense as of the end of this year in the amount of P50,000 was also not recorded. 3) the office equipment is overstated last year by P40,000 due to under depreciation. Net Income for the period is P400,000. Required: 1. Journalize the above transactions. 2. Compute the adjusted balance of accumulated profits.
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