The before-tax income for Concord Co. for 2025 was $97,000 and $72,300 for 2026. However, the accountant noted that the following errors had been made: 1. 2. 3. 4. Sales for 2025 included amounts of $38,500 which had been received in cash during 2025, but for which the related products were delivered in 2026. Title did not pass to the purchaser until 2026. The inventory on December 31, 2025, was understated by $7,800. The bookkeeper in recording interest expense for both 2025 and 2026 on bonds payable made the following entry on an annual basis. Interest Expense 16,200 Cash 16,200 The bonds have a face value of $270,000 and pay a stated interest rate of 6%. They were issued at a discount of $17,000 on January 1, 2025, to yield an effective-interest rate of 7%. (Assume that the effective-interest method should be used.) Ordinary repairs to equipment had been erroneously charged to the Equipment account during 2025 and 2026. Repairs in the amount of $8,100 in 2025 and $8,700 in 2026 were so charged. The company applies a rate of 10% to the balance in the Equipment account at the end of the year in its determination of depreciation charges. Prepare a schedule showing the determination of corrected income before taxes for 2025 and 2026. (Enter negative amounts using either a negative sign preceding the number e.g. -15,000 or parentheses e.g. (15,000). Round answers to O decimal places, e.g. 125.)
The before-tax income for Concord Co. for 2025 was $97,000 and $72,300 for 2026. However, the accountant noted that the following errors had been made: 1. 2. 3. 4. Sales for 2025 included amounts of $38,500 which had been received in cash during 2025, but for which the related products were delivered in 2026. Title did not pass to the purchaser until 2026. The inventory on December 31, 2025, was understated by $7,800. The bookkeeper in recording interest expense for both 2025 and 2026 on bonds payable made the following entry on an annual basis. Interest Expense 16,200 Cash 16,200 The bonds have a face value of $270,000 and pay a stated interest rate of 6%. They were issued at a discount of $17,000 on January 1, 2025, to yield an effective-interest rate of 7%. (Assume that the effective-interest method should be used.) Ordinary repairs to equipment had been erroneously charged to the Equipment account during 2025 and 2026. Repairs in the amount of $8,100 in 2025 and $8,700 in 2026 were so charged. The company applies a rate of 10% to the balance in the Equipment account at the end of the year in its determination of depreciation charges. Prepare a schedule showing the determination of corrected income before taxes for 2025 and 2026. (Enter negative amounts using either a negative sign preceding the number e.g. -15,000 or parentheses e.g. (15,000). Round answers to O decimal places, e.g. 125.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 5E: Fava Company began operations in 2018 and used the LIFO inventory method for both financial...
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Transcribed Image Text:The before-tax income for Concord Co. for 2025 was $97,000 and $72,300 for 2026. However, the accountant noted that the
following errors had been made:
1.
2.
3.
4.
Sales for 2025 included amounts of $38,500 which had been received in cash during 2025, but for which the related products
were delivered in 2026. Title did not pass to the purchaser until 2026.
The inventory on December 31, 2025, was understated by $7,800.
The bookkeeper in recording interest expense for both 2025 and 2026 on bonds payable made the following entry on an
annual basis.
Interest Expense 16,200
Cash
16,200
The bonds have a face value of $270,000 and pay a stated interest rate of 6%. They were issued at a discount of $17,000 on
January 1, 2025, to yield an effective-interest rate of 7%. (Assume that the effective-interest method should be used.)
Ordinary repairs to equipment had been erroneously charged to the Equipment account during 2025 and 2026. Repairs in the
amount of $8,100 in 2025 and $8,700 in 2026 were so charged. The company applies a rate of 10% to the balance in the
Equipment account at the end of the year in its determination of depreciation charges.
Prepare a schedule showing the determination of corrected income before taxes for 2025 and 2026. (Enter negative amounts using
either a negative sign preceding the number e.g. -15,000 or parentheses e.g. (15,000). Round answers to O decimal places, e.g. 125.)
Transcribed Image Text:Income before Tax
Corrections:
Sales Erroneously Included in 2025 Income
Understatement of 2025 Ending Inventory
Adjustment to Bond Interest Expense
Repairs Erroneously Charged to the Equipment Account
Depreciation Recorded on Improperly Capitalized Repairs
Corrected Income before Tax
$
2025
100000
$
$
2026
000000
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