Shannon Company began operations on January 1, 2013. The financial statements contained the following errors: 2013 2014 Ending inventory 160,000 understated 150,000 overstated Depreciation expense 60,000 understated Insurance expense 100,000 overstated 100,000 understated Prepaid insurance 100,000 understated On December 31, 2014, fully depreciated machinery was sold for P108,000 cash but the sale was not recorded until 2015. No corrections have been made for any of the errors. Ignoring income tax, what is the total effect of the errors on Working capital on December 31, 2014?
Shannon Company began operations on January 1, 2013. The financial statements contained the following errors: 2013 2014 Ending inventory 160,000 understated 150,000 overstated Depreciation expense 60,000 understated Insurance expense 100,000 overstated 100,000 understated Prepaid insurance 100,000 understated On December 31, 2014, fully depreciated machinery was sold for P108,000 cash but the sale was not recorded until 2015. No corrections have been made for any of the errors. Ignoring income tax, what is the total effect of the errors on Working capital on December 31, 2014?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Shannon Company began operations on January 1, 2013. The financial statements contained the
following errors:
2013 2014
Ending inventory 160,000 understated 150,000 overstated
Insurance expense 100,000 overstated 100,000 understated
Prepaid insurance 100,000 understated
On December 31, 2014, fully depreciated machinery was sold for P108,000 cash but the sale was not recorded until 2015. No corrections have been made for any of the errors. Ignoring income tax, what is the total effect of the errors on Working capital on December 31, 2014?
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