Use the following information for the next four questions: GULOSITY GREEDINESS Co. reported profits of P4,000,000 and P8,000,000 in 20x1 and 20x2, respectively. In 20x3, the following prior period errors were discovered: • The inventory on December 31, 20x1 was understated by P200,000. • An equipment with an acquisition cost of P1,200,000 was erroneously charged as expense in 20x1. The equipment has an estimated useful life of 5 years with no residual value. GULOSITY Co. provides full year depreciation in the year of acquisition. The unadjusted balances of retained earnings are P8,800,000 and P16,800,000 as of December 31, 20x1 and 20x2, respectively. 7. How much is the correct profit in 20x1? a. 7,560,000 c. 4,760,000 d. 5,160,000 b. 5,610,000

Use the following information for the next four questions: GULOSITY GREEDINESS Co. reported profits of P4,000,000 and P8,000,000 in 20x1 and 20x2, respectively. In 20x3, the following prior period errors were discovered: • The inventory on December 31, 20x1 was understated by P200,000. • An equipment with an acquisition cost of P1,200,000 was erroneously charged as expense in 20x1. The equipment has an estimated useful life of 5 years with no residual value. GULOSITY Co. provides full year depreciation in the year of acquisition. The unadjusted balances of retained earnings are P8,800,000 and P16,800,000 as of December 31, 20x1 and 20x2, respectively. 7. How much is the correct profit in 20x1? a. 7,560,000 c. 4,760,000 d. 5,160,000 b. 5,610,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Want to give you a correct answer
James Dalton prepared draft accounts for his business for the year ended 31.12.20. According to the draft accounts, his profit for the year amounted to €23,000. The following mistakes have now been discovered. (1) An item purchased at the beginning of the year for €1,800 had been charged to revenue instead of being capitalised and depreciated at the rate of 10% per annum. (2) No record had been made of goods costing €200 which had been withdrawn by Mr Dalton for his own use. (3) Goods sold for €300 had been returned and included in the closing stock at their cost of €240. The value of the goods was nil. No entries had been made in the books to record their return by the customer. (4) A cheque for €100 was issued to a supplier but no entry had been made in the books to record the transaction. (5) On 31 December a second hand delivery van was purchased at a price of €2,800. This van was intended to replace an old one which had a written down value of €800 at that date. The new van was…
If Wakowski Company's ending inventory was actually $86,000 but was adjusted at year end to a balance of $68,000 in error, what would be the impact on the presentation of the balance sheet and income statement for the year that the error occurred, if any? If no entry is required, select "None" and leave the amount boxes blank. Balance Sheet: Merchandise Inventory $4 Current Assets Total Assets Retained Earnings Income Statement: Cost of Goods Sold Gross Profit/Gross Margin Net Income
19.Your review of ABC Company's inventory and related records for the year revealed the following information:Inventory, 1/1 - 450,000Purchases -3,150,000Sales -4,200,000You conducted a physical inventory on December 31 and determined P450,000 was in the company's warehouse. The management suspects some new employees may have pilfered a portion of the merchandise inventory.What is the cost of the missing inventory assuming that ABC's gross profit remains at 30% of sales?
What is the unrealized profit in inventory on Dec 31, 20X3?What is the unrealized profit in inventory on Dec 31, 20X4?What is Consolidated Inventory on Dec 31, 20X4?What is Noncontrolling interest share of Saucer's net income?
Your review of Mine Company's inventory and related records for the year revealed the following information:Inventory, 1/1 - 450,000Purchases -3,150,000Sales -4,200,000You conducted a physical inventory on December 31 and determined P450,000 was in the company's warehouse. The management suspects some new employees may have pilfered a portion of the merchandise inventory.What is the cost of the missing inventory assuming that Mine's gross profit remains at 30% of sales?
23
During the audit of BAC Company's 2029 financial statements, the auditors discovered that the 2029 ending inventory had been understated by $12,000 and that the 2029 beginning inventory was overstated by $9,000. Before the effect of these errors, 2029 pretax income had been computed as $115,000. What should be reported as the correct 2029 pretax income? A) $112,000 B) $94,000 C) $118,000 D) $136,000 E) $103,000
On December 31, 20x2, Grayson Inc. changed its inventory valuation method to FIFO from weighted-average. The change will result in an $800,000 increase in the beginning inventory at January 1, 20x2. Assume a 30% income tax rate. The cumulative effect of this accounting change on prior periods that will be reported as an adjustment to the beginning balance of retained earnings is O $560,000 O $800,000 0$-0- O $40,000
Question: XYZ Inc. is a large manufacturing company that uses the weighted average method for inventory valuation. During the current financial year, the company experienced a significant increase in its inventory levels due to a surge in production and raw material purchases. At the end of the year, the company's management noticed discrepancies between the physical count and the recorded inventory levels in the books. Which of the following statements regarding the weighted average method for inventory valuation and its impact on financial statements is correct? A) The weighted average method assigns the same cost to each unit of inventory, regardless of when it was purchased, resulting in a smoother cost flow compared to other inventory valuation methods. B) When using the weighted average method, the ending inventory value is based on the most recent purchases made during the year, resulting in a higher cost of goods sold (COGS) and lower gross profit. C) The weighted…
While examining the December 31, 2010 financial statements of Dawn Company, the following errors are discovered:  Inventory at January 1 had been overstated by P50,000.;  Inventory at December 31 was understated by P100,000.;  During 2010, Dawn received a P200,000 cash advance from customer for merchandise to be manufactured and shipped during 2011. The collection was credited to sales revenue.;  The net income reported on the 2010 income statement before reflecting any adjustments for the above items is P5,000,000. What is the corrected net income for the year ended December 31, 2010? Choices; 4,950,000 5,150,000 5,100,000 4,850,000
Ward Distribution Company has determined its year-end inventory on a LIFO basis at $320,000. Information pertaining to that inventory follows. Item Amount Estimated selling price $332,800 Estimated cost of disposal 16,000 Normal profit margin 48,000 Current replacement cost 304,000 What is the loss that Ward should recognize? Assume no previously recorded inventory holding loss. Select one: a. $0 b. $3,200 c. $16,000 d. $51,200 O