What is the corrected net income for the year ended December 31, 2021? The condensed income statement of J&J Co. for the year ended December 31, 2021 ispresented below:J&J Co.Income StatementFor the Year Ended December 31, 2021SalesCost of goods soldGross incomeOperating expensesNet income1,000,000600,000400,000150,000250.000An examination of the company records shows the following errors must be corrected:1. December 31, 2021 inventory is understated by: P31,000.2. Accrued expenses of P4,000 and prepaid expenses of P6,000 were not recognizedin the company's books. The company employs the expense method in accountingfor prepayments.3. Sales of P5,000 were not recorded until January 2022, although the goods wereshipped in December 31, 2021, and were excluded from the December 31 physicalinventory.4. Purchases of P30,000 made in December 31, 2021, were not recorded although thegoods were received and properly included in the December 31, physical inventory.5. A machine was sold for P10,000 on July 1, 2021, and the proceeds were credited tothe Sales account. The machine was acquired on January 1, 2018 for P60,000. Atthat time, it had an estimated life of six years with no residual value. No depreciationwas recorded on this machine in 2021.

The question is related to ascertaing the correct net income for the year 31st December 2021.

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What is the corrected net income for the year ended December 31, 2021?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

What is the corrected net income for the year ended December 31, 2021?

The condensed income statement of J&J Co. for the year ended December 31, 2021 is
presented below:
J&J Co.
Income Statement
For the Year Ended December 31, 2021
Sales
Cost of goods sold
Gross income
Operating expenses
Net income
1,000,000
600,000
400,000
150,000
250.000
An examination of the company records shows the following errors must be corrected:
1. December 31, 2021 inventory is understated by: P31,000.
2. Accrued expenses of P4,000 and prepaid expenses of P6,000 were not recognized
in the company's books. The company employs the expense method in accounting
for prepayments.
3. Sales of P5,000 were not recorded until January 2022, although the goods were
shipped in December 31, 2021, and were excluded from the December 31 physical
inventory.
4. Purchases of P30,000 made in December 31, 2021, were not recorded although the
goods were received and properly included in the December 31, physical inventory.
5. A machine was sold for P10,000 on July 1, 2021, and the proceeds were credited to
the Sales account. The machine was acquired on January 1, 2018 for P60,000. At
that time, it had an estimated life of six years with no residual value. No depreciation
was recorded on this machine in 2021.

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