The before-tax income for Kingbird Co. for 2025 was $107,000 and $77,200 for 2026. However, the accountant noted that the following errors had been made: 1. 2 3. 4. Sales for 2025 included amounts of $41,300 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 $9,000. The bookkeeper in recording interest expense for both 2025 and 2026 on bonds payable made the following entry on an annual basis. Interest Expense 14,400 Cash 14,400 The bonds have a face value of $240,000 and pay a stated interest rate of 6%. They were issued at a discount of $16,000 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 $8,600 in 2025 and $9,000 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 Kingbird Co. for 2025 was $107,000 and $77,200 for 2026. However, the accountant noted that the following errors had been made: 1. 2 3. 4. Sales for 2025 included amounts of $41,300 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 $9,000. The bookkeeper in recording interest expense for both 2025 and 2026 on bonds payable made the following entry on an annual basis. Interest Expense 14,400 Cash 14,400 The bonds have a face value of $240,000 and pay a stated interest rate of 6%. They were issued at a discount of $16,000 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 $8,600 in 2025 and $9,000 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The before-tax income for Kingbird Co. for 2025 was $107,000 and $77,200 for 2026. However, the accountant noted that the
following errors had been made:
1.
2
3.
4.
Sales for 2025 included amounts of $41,300 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 $9,000.
The bookkeeper in recording interest expense for both 2025 and 2026 on bonds payable made the following entry on an
annual basis.
Interest Expense 14,400
Cash
14,400
The bonds have a face value of $240,000 and pay a stated interest rate of 6%. They were issued at a discount of $16,000 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 $8,600 in 2025 and $9,000 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 eg.-15,000 or parentheses e.g. (15,000). Round answers to 0 decimal places, eg. 125)
Transcribed Image Text: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 eg. (15,000). Round answers to O decimal places, e.g. 125.)
Income before Tax
Corrections:
Corrected Income before Tax
2025
s
2026
10
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