PROBLEM 6-4 Noncounterbalancing Erors You discovered the following errors in connection with your examination of the financial statements of Joy Corporation: 1) The Company paid one- year insurance premium of P24,000 effective Anril 1, 2020. The entire amount was debited to asset account and no adjustment was made at the end of 2020. 2) The company leased a portion of its building for P48,000. The term of the lease is one year ending April 30, 2021. Collection of rent was credited to unearned rent revenue account. At the end of 2020, no entry was made to take up the earned portion of the amount collected. 3) Depreciation expense in 2020 was understated by P12,000. 4) Improvements on building amounting to P200,000 had been charged to expense on January 1, 2020. Improvements have a life of 5 years. 5) On January 1, 2020, an equipment costing P40,000 was sold for P20,000. At the date of sale, the equipment had an accumulated depreciation of P15,000. The cash received was recorded as other income in 2020. 6) Repairs expense on the building amounting to P20,000 had been charged to the building account on January 1, 2020. Depreciation expense has been recorded in 2020 and 2021 based on the 5 year remaining useful life of the building.
PROBLEM 6-4 Noncounterbalancing Erors You discovered the following errors in connection with your examination of the financial statements of Joy Corporation: 1) The Company paid one- year insurance premium of P24,000 effective Anril 1, 2020. The entire amount was debited to asset account and no adjustment was made at the end of 2020. 2) The company leased a portion of its building for P48,000. The term of the lease is one year ending April 30, 2021. Collection of rent was credited to unearned rent revenue account. At the end of 2020, no entry was made to take up the earned portion of the amount collected. 3) Depreciation expense in 2020 was understated by P12,000. 4) Improvements on building amounting to P200,000 had been charged to expense on January 1, 2020. Improvements have a life of 5 years. 5) On January 1, 2020, an equipment costing P40,000 was sold for P20,000. At the date of sale, the equipment had an accumulated depreciation of P15,000. The cash received was recorded as other income in 2020. 6) Repairs expense on the building amounting to P20,000 had been charged to the building account on January 1, 2020. Depreciation expense has been recorded in 2020 and 2021 based on the 5 year remaining useful life of the building.
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter17: Synthesis And Extensions
Section: Chapter Questions
Problem 9E
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Question
Based on the given data, answer the three questions. Show your solutions.
Transcribed Image Text:The following data were extracted from the financial statements of Joy
Corporation:
2020
2021
150,000
400,000
250,000
Net income
100,000
300,000
Working capital
RE, end of the year
100,000
Questions:
Based on the above data, determine the following:
1.
Net Income in 2020
а. Р221,000
b. Р70,000
с. Р82,000
d. P114,000
2. Working capital, end of 2020
a. P314,000
P360,000
с. Р332,000
d. P282,000
Retained earnings, end of 2020
P221,000
b. P70,000
а.
с. Р82,000
d. P114,000
Transcribed Image Text:PROBLEM 6-4 Noncounterbalancing Errors
You discovered the following errors in connection with your examination of the
financial statements of Joy Corporation:
1) The Company paid one- year insurance premium of P24,000 effective Anril
1, 2020. The entire amount was debited to asset account and no adjustment
was made at the end of 2020.
2) The company leased a portion of its building for P48,000. The term of the
lease is one year ending April 30, 2021. Collection of rent was credited to
unearned rent revenue account. At the end of 2020, no entry was made to
take up the earned portion of the amount collected.
3) Depreciation expense in 2020 was understated by P12,000.
4) Improvements on building amounting to P200,000 had been charged to
expense on January 1, 2020. Improvements have a life of 5 years.
5) On January 1, 2020, an equipment costing P40,000 was sold for P20,000. At
the date of sale, the equipment had an accumulated depreciation of P15,000.
The cash received was recorded as other income in 2020.
6) Repairs expense on the building amounting to P20,000 had been charged to
the building account on January 1, 2020. Depreciation expense has been
recorded in 2020 and 2021 based on the 5 year remaining useful life of the
building.
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