Questions: 1 How much is the adjusted net income in 2021? subpart: 1.1 How much is the adjusted net income in 2022? 1.2 How much is the adjusted net income (loss) in 2023?
Questions: 1 How much is the adjusted net income in 2021? subpart: 1.1 How much is the adjusted net income in 2022? 1.2 How much is the adjusted net income (loss) in 2023?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Questions:
1 How much is the adjusted net income in 2021?
subpart:
1.1 How much is the adjusted net income in 2022?
1.2 How much is the adjusted net income (loss) in 2023?
![CASE 3: Misstatement in Financial Statement Audit
Tokyo, a CPA was engaged by Heist Corporation in 2023 to examine its books and records and proposed any
adjustments if necessary. During the audit process, Tokyo noted the following on its working paper:
[1.] A physical count of inventory was made at the end of 2021 and 2022, by the audit procedures performed the
following were noted:
Per audit (count)
P705,900
648,450
[2.] Heist had failed to record sales commissions payable of P12,000 and P5,000 at the end of 2022 and 2023,
respectively.
Date
12/31/2022
12/31/2023
Date
2021
Jan
1
Dec 31
2022
Jan 10
[3.] Heist also failed to recognize supplies on hand of P3,000 and P5,000 at the end of 2022 and 2023,
respectively.
[4.] Improvements in machinery and equipment of P180,000 had been Machinery and equipment account at the
end of April 2020. Improvements made increase the capacity of the machinery and equipment and estimated
to have 10-year life. No depreciation was recorded on these expenditure eversince.
[5.] Dividends have been declared on December 30 in 2021 and 2022 but had not been entered in the books
until payment was made.
[6.] The retained earnings account appeared as shown below:
RETAINED EARNINGS
Items
Debit
Mar
6
Dec 31
2023
Jan
Dec
Balance
Net income
Dividends paid
Issued shares -
excess of par
Net income
Per book
P725,900
623,450
10 Dividends paid
31 Net loss
P-
48,000
48,000
85,500
Credit
P-
510,000
63,000
362,000
Balance
P405,000
915,000
867,000
930,000
1,292,000
Page 3
1,244,000
1,159,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F38825fa7-25d1-4d00-abae-09f1b37e3439%2F8f5ffe0a-bbf9-43a3-9e48-741c9b48c371%2Fklf704_processed.jpeg&w=3840&q=75)
Transcribed Image Text:CASE 3: Misstatement in Financial Statement Audit
Tokyo, a CPA was engaged by Heist Corporation in 2023 to examine its books and records and proposed any
adjustments if necessary. During the audit process, Tokyo noted the following on its working paper:
[1.] A physical count of inventory was made at the end of 2021 and 2022, by the audit procedures performed the
following were noted:
Per audit (count)
P705,900
648,450
[2.] Heist had failed to record sales commissions payable of P12,000 and P5,000 at the end of 2022 and 2023,
respectively.
Date
12/31/2022
12/31/2023
Date
2021
Jan
1
Dec 31
2022
Jan 10
[3.] Heist also failed to recognize supplies on hand of P3,000 and P5,000 at the end of 2022 and 2023,
respectively.
[4.] Improvements in machinery and equipment of P180,000 had been Machinery and equipment account at the
end of April 2020. Improvements made increase the capacity of the machinery and equipment and estimated
to have 10-year life. No depreciation was recorded on these expenditure eversince.
[5.] Dividends have been declared on December 30 in 2021 and 2022 but had not been entered in the books
until payment was made.
[6.] The retained earnings account appeared as shown below:
RETAINED EARNINGS
Items
Debit
Mar
6
Dec 31
2023
Jan
Dec
Balance
Net income
Dividends paid
Issued shares -
excess of par
Net income
Per book
P725,900
623,450
10 Dividends paid
31 Net loss
P-
48,000
48,000
85,500
Credit
P-
510,000
63,000
362,000
Balance
P405,000
915,000
867,000
930,000
1,292,000
Page 3
1,244,000
1,159,000
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