The errors below were noted after the books of CalMart Corporation were audited at the close of 2021 Indicate the effects of each of the following errors with an O for Overstatement, U for understatement and N for no effect in the appropriate column.20202021Earnings Retained Eamings afterclosingRetainedbefore closingEamings Retained Earnings afterdosingNet IncomeAssetLiabilityRetainedbefore closingNet IncomeAssetLiabilityFailure to record purchases ofmerchandise on account ofP2,000 at the end of 2020.Sale of merchandise on accounton December 30,2020 amountingto P2.000 was not recorded untilthe customer paid his account onJanuary 2021.Depreciationequipmentoverstated by P1,000.expense2020inonwas

The overstatement of account is the excess record of that which the amount has to be recorded. Vice…

The errors below were noted after the books of CalMart Corporation were audited at the close of 2021 Indicate the effects of each of the following errors with an O for Overstatement, U for understatement and N for no effect in the appropriate column. 2020 Liability Retained before closing 2021 Liability Earnings Retained Earnings after Net Income Eamings Retained Earnings after dosing Net Income Asset Asset Retained closing before closing Failure to record purchases of merchandise on account of P2.000 at the end of 2020. Sale of merchandise on account on December 30,2020 amounting to P2,000 was not recorded until the customer paid his account on January 2021. Depreciation equipment overstated by P1.000. expense 2020 on was

The errors below were noted after the books of CalMart Corporation were audited at the close of 2021 Indicate the effects of each of the following errors with an O for Overstatement, U for understatement and N for no effect in the appropriate column. 2020 Liability Retained before closing 2021 Liability Earnings Retained Earnings after Net Income Eamings Retained Earnings after dosing Net Income Asset Asset Retained closing before closing Failure to record purchases of merchandise on account of P2.000 at the end of 2020. Sale of merchandise on account on December 30,2020 amounting to P2,000 was not recorded until the customer paid his account on January 2021. Depreciation equipment overstated by P1.000. expense 2020 on was

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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Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2023 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $50,000 During 2024, credit sales were $1,850,000, cash collections from customers $1,930,000, and $59,000 in accounts receivable were written off. In addition, $5,000 was collected from a customer whose account was written off in 2023. An aging of accounts receivable at December 31, 2024, reveals the following: Age Group 0-60 days 61-90 days 91-120 days Over 120 days Percentage of Year- End Receivables in Group 65% 15 15 5 Percent Uncollectible 4% 10 30 50 $ 532,000 Required: 1. Prepare summary journal entries to account for the 2024 write-offs and the collection of the receivable previously written off. 2. Prepare the year-end adjusting entry for bad debts according to each of the…
During 2021, WMC Corporation discovered that its ending inventories reported on its financial statements were misstated by the following amounts:2019 understated by $120,0002020 overstated by 150,000WMC uses the periodic inventory system and the FIFO cost method.Required:1. Determine the effect of these errors on retained earnings at January 1, 2021, before any adjustments. (Ignore income taxes.)2. Prepare a journal entry to correct the error in 2021.3. Will WMC account for the error (a) retrospectively or (b) prospectively?
Adjusting and Correcting Entries Upon inspecting the books and records for Wernli Company for the year ended December 31, 2013, you find the following data: (a) A receivable of $640 from Hatch Realty is determined to be uncollectible. The company maintains an allowance for bad debts for such losses. (b) A creditor, E. F. Bowcutt Co., has just been awarded damages of $3,500 as a result of breach of contract by Wernli Company during the current year. Nothing appears on the books in connection with this matter. (c) A fire destroyed part of a branch office. Furniture and fixtures that cost $12,300 and had a book value of $8,200 at the time of the fire were completely destroyed. The insurance company has agreed to pay $7,000 under the provisions of the fire insurance policy. (d) Advances of $950 to salespersons have been previously recorded as sales salaries expense. (e) Machinery at the end of the year shows a balance of $19,960. It is discovered that additions to this account during the…
Green Company overstated its inventory by $50 million at the end of 2021. The discovery of this error (in 2023), before adjusting or closing entries, would require: A. An increase of retained earnings in 2023 balance sheet. B. A debit to inventory of $50 million in 2023 balance sheet. C. the restatement of 2021 and 2022 fınancials D. none of the above O A O B
Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2023 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $37,000 During 2024, credit sales were $1,785,000, cash collections from customers $1,865,000, and $42,000 in accounts receivable were written off. In addition, $3,700 was collected from a customer whose account was written off in 2023. An aging of accounts receivable at December 31, 2024, reveals the following: Age Group 0-60 days 61-90 days 91-120 days Over 120 days Percentage of Year- End Receivables in Group 60% 10 20 10 $ 467,000 Percent Uncollectible 38 5 25 45 Required: 1. Prepare summary journal entries to account for the 2024 write-offs and the collection of the receivable previously written off. 2. Prepare the year-end adjusting entry for bad debts according to each of the…
Lumen INC. is preparing its 2021 year-end financial statements. Prior to any adjustments, inventory is valued at P76,050, based on a physical count. The following information has been found relating to certain inventory transactions.I. Goods valued at P 11,000 are on consignment with a customer. These goods are not included in the P76,050 inventory figure. Which of the following statements is true?a. There is no effect on the 2021 ending inventory.b. 2021 ending inventory is overstated.c. The 2021 net income is overstated.d. The 2021 net income is understated.Please included an explaination.
Question no. 02 (b) (07)Wilson Corporation uses an income statement approach to estimate credit losses. Its Accounts Receivable of $5,000,000 at the beginning of the period had a net realizable value of $4,225,000.During year 2019 company wrote off all of its uncollectible accounts. Of these accounts 35% were subsequently collected. Prepare the entries to record write off using allowance for doubtful account and direct write off approaches. Draft Entry to record the accounts receivable that were subsequently collected. Allowance for doubtful account is treated as an expense or as a liability in general journal. Give reasons for your answer. Moreover explain the treatment of these in balance sheet. What is the characteristic common to all current assets? Many retail stores regularly sell merchandise on installment plans, calling for payments over a period of 24 or 36 months. Do such receivables qualify as current assets? Explain.
The following are a series of unrelated situations.Answer the questions relating to each of the five independent situations as requested.1. Sage Company’s unadjusted trial balance at December 31, 2020, included the following accounts. Debit Credit Accounts receivable $53,700 Allowance for doubtful accounts 4,640 Net sales $1,227,300 Sage Company estimates uncollectible accounts will be 8% of gross accounts receivable. Determine its bad debt expense for 2020. Bad debt expense for 2020 $ 2. An analysis and aging of Pronghorn Corp. accounts receivable at December 31, 2020, disclosed the following. Amounts estimated to be uncollectible $ 184,460 Accounts receivable 1,758,700 Allowance for doubtful accounts (per books) 127,940 What is the net amount expected to be collected of Pronghorn’s receivables at December 31, 2020? Net realizable value $ 3. Stellar Co. provides for doubtful accounts based on 3% of…
(S) porins) An audit of Antwren revealed four errors that were made but never corrected. In 2021, ending inventory was overstated by $201, 000 and depreciation was overstated by $44,000. In 2022, nding inventory was understated by $111, 000 and wages expens as understated by $86, 000. What effect did these errors have 0 htwren's 2022 net income? (RE&CF 6) understated by $226, 000 overstated by $132, 000 pverstated by $157,000 inderstated by $25,000
At December 31, 2022, the trial balance of Concord Corporation contained the following amounts before adjustment. Accounts Receivable Allowance for Doubtful Accounts Sales Revenue Debit (b) (c) $189,800 Credit $ 1,570 871,700 (a) Prepare the adjusting entry at December 31, 2022, to record bad debt expense, assuming that the aging schedule indicates that $11,020 of accounts receivable will be uncollectible. Repeat part (a), assuming that instead of a credit balance there is a $1,570 debit balance in Allowance for Doubtful Accounts. During the next month, January 2023, a $2,050 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off. (d) Repeat part (c), assuming that Concord Corporation uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
During 2021, WMC Corporation discovered that its ending inventories reported in its financial statements were misstated by the following material amounts: 2019 understated by $120,000 2020 overstated by 150,000 WMC uses a periodic inventory system and the FIFO cost method.Required:1. Determine the effect of these errors on retained earnings at January 1, 2021, before any adjustments. Explain your answer. (Ignore income taxes.)2. Prepare a journal entry to correct the errors.3. What other step(s) would be taken in connection with the correction of the errors?
You have been assigned to examine the financial statements of PC corp. for the year ended December 31, 2021, as prepared following IFRS. You discover the following situations: 1. Physical inventory count on Dec 31, 2021, improperly included merchandise costing $3,800 that had been sold but not delivered until Jan 5, 2022. PC uses a periodic inventory system. 2. Depreciation of $1,700 for 2021 on delivery vehicles was not recorded. 3. A collection of $4,600 on account from a customer received on Dec 31, 2021, was not recorded. 4. At the beginning of 2020, the company purchased equipment for $225,000 (residual value $22,500) and had a useful life of 6 years. The accountant used straight-line amortization but failed to deduct the residual value in the calculation of the depreciation for 2020 and 2021. Instructions: Prepare the required journal entries (if any) to correct PC accounts, assuming each transaction is independent and assuming 2021 books are not closed.