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Requirements: a. What are the net effects of the errors on Rodney's 20x1 and 20x2 profit or loss, repesctively? b. What is the effect of the errors on Rodney's December 31, 20x2 retained earnings?

Requirements: a. What are the net effects of the errors on Rodney's 20x1 and 20x2 profit or loss, repesctively? b. What is the effect of the errors on Rodney's December 31, 20x2 retained earnings?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Requirements:

a. What are the net effects of the errors on Rodney's 20x1 and 20x2 profit or loss, repesctively?

b. What is the effect of the errors on Rodney's December 31, 20x2 retained earnings?

17. Rodney Company's December statements contained the following errors: 31 year-end financial 20x1 20x2 Ending inventory Depreciation expense 4,000 understated 3,600 overstated 800 understated An insurance premium of P3,600 was prepaid in 20x1 covering the years 20x1, 20x2, and 20x3. The entire amount was charged to expense in 20x1. In addition, on December 31, 2002, fully depreciated machinery was sold for P6,400 cash, but the sale was not recorded until 20x3, There were no other errors during 20x1 or 20x2, and no corrections have been made for any of the errors. Ignore income tax considerations. (Adapted) Requirements:
Transcribed Image Text:17. Rodney Company's December statements contained the following errors: 31 year-end financial 20x1 20x2 Ending inventory Depreciation expense 4,000 understated 3,600 overstated 800 understated An insurance premium of P3,600 was prepaid in 20x1 covering the years 20x1, 20x2, and 20x3. The entire amount was charged to expense in 20x1. In addition, on December 31, 2002, fully depreciated machinery was sold for P6,400 cash, but the sale was not recorded until 20x3, There were no other errors during 20x1 or 20x2, and no corrections have been made for any of the errors. Ignore income tax considerations. (Adapted) Requirements:
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