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The Gloria Corporation's comparative statements of comprehensive income lor ale years 2021 and 2020 are presented below:

The Gloria Corporation's comparative statements of comprehensive income lor ale years 2021 and 2020 are presented below:

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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The Gloria Corporation's comparative statements of comprehensive income lor de years 2021 and 2020 are presented below: 2020 720,000 450,000 270,000 30,000 300,000 190,000 110,000 20,000 90,000 2021 1,000,000 P 600,000 400,000 P 80,000 Sales Cost of Sales Gross Profit Other Operating Income Total Income P 480,000 280,000 200,000 P 80,000 120,000 P P P Less: Selling and Administrative Expenses Profit from Operations before Interest and Income Tax Interest Expense Profit The following errors were discovered : The following had been overlooked by the company at the end of 2021 and 2020: Unearned commission income Prepaid rent Accrued interest receivable Accrued wages expense 2021 6,400 21,000 12,000 22,000 2020 8,000 16,000 8,000 25,000 Advances of P90,000 received from customers in 2021 were credited to Sales, although deliveries were made only in 2022. Purchase of merchandise, P15,000, shipped FOB destination in December 2020 and received by the company in 2021 were recorded as purchases in 2020, because the supplier's invoice was received in 2020. The goods, however, were omitted from 2020 ending inventory. The company installed equipment on its administrative office on July 1, 2020. Installation cost of P20,000 was recorded by the company as an expense. Depreciation is computed using the straight-line method over a useful life of five years, rounding to the nearest month. Ignore income tax effects. Required: (a) Prepare corrected comparative statements of comprehensive income for the years ended December 31, 2021 and 2020. (b) For how much were the total assets at December 31, 2020 understated or overstated? (c) For how much were the total assets at December 31, 2021 understated or overstated? For how much were the total liabilities at December 31, 2021 understated or overstated? (d) Scanned with CamScanner
Transcribed Image Text:The Gloria Corporation's comparative statements of comprehensive income lor de years 2021 and 2020 are presented below: 2020 720,000 450,000 270,000 30,000 300,000 190,000 110,000 20,000 90,000 2021 1,000,000 P 600,000 400,000 P 80,000 Sales Cost of Sales Gross Profit Other Operating Income Total Income P 480,000 280,000 200,000 P 80,000 120,000 P P P Less: Selling and Administrative Expenses Profit from Operations before Interest and Income Tax Interest Expense Profit The following errors were discovered : The following had been overlooked by the company at the end of 2021 and 2020: Unearned commission income Prepaid rent Accrued interest receivable Accrued wages expense 2021 6,400 21,000 12,000 22,000 2020 8,000 16,000 8,000 25,000 Advances of P90,000 received from customers in 2021 were credited to Sales, although deliveries were made only in 2022. Purchase of merchandise, P15,000, shipped FOB destination in December 2020 and received by the company in 2021 were recorded as purchases in 2020, because the supplier's invoice was received in 2020. The goods, however, were omitted from 2020 ending inventory. The company installed equipment on its administrative office on July 1, 2020. Installation cost of P20,000 was recorded by the company as an expense. Depreciation is computed using the straight-line method over a useful life of five years, rounding to the nearest month. Ignore income tax effects. Required: (a) Prepare corrected comparative statements of comprehensive income for the years ended December 31, 2021 and 2020. (b) For how much were the total assets at December 31, 2020 understated or overstated? (c) For how much were the total assets at December 31, 2021 understated or overstated? For how much were the total liabilities at December 31, 2021 understated or overstated? (d) Scanned with CamScanner
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