Wildhorse Tool Corporation's December 31 year-end financial statements contained the following errors: December 31, 2022 December 31, 2023 Ending inventory $10,900 overstated $10,200 understated Depreciation expense $3,500 overstated An insurance premium of $50,400 covering the years 2022, 2023, and 2024 was prepaid in 2022, with the entire amount charged to expense that year. In addition, on December 31, 2023, fully depreciated machinery was sold for $15,400 cash, but the entry was not recorded until 2024. There were no other errors during 2022 or 2023, and no corrections have been made for any of the errors. Wildhorse follows ASPE. Answer the following, ignoring income tax considerations. (a) Calculate the total effect of the errors on 2023 net income. Effect of errors on 2023 net income: $

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
None
Wildhorse Tool Corporation's December 31 year-end financial statements contained the following errors:
December 31, 2022
December 31, 2023
Ending inventory
$10,900
overstated
$10,200
understated
Depreciation expense
$3,500
overstated
An insurance premium of $50,400 covering the years 2022, 2023, and 2024 was prepaid in 2022, with the entire amount charged to
expense that year. In addition, on December 31, 2023, fully depreciated machinery was sold for $15,400 cash, but the entry was not
recorded until 2024. There were no other errors during 2022 or 2023, and no corrections have been made for any of the errors.
Wildhorse follows ASPE.
Answer the following, ignoring income tax considerations.
(a)
Calculate the total effect of the errors on 2023 net income.
Effect of errors on 2023 net income:
$
Transcribed Image Text:Wildhorse Tool Corporation's December 31 year-end financial statements contained the following errors: December 31, 2022 December 31, 2023 Ending inventory $10,900 overstated $10,200 understated Depreciation expense $3,500 overstated An insurance premium of $50,400 covering the years 2022, 2023, and 2024 was prepaid in 2022, with the entire amount charged to expense that year. In addition, on December 31, 2023, fully depreciated machinery was sold for $15,400 cash, but the entry was not recorded until 2024. There were no other errors during 2022 or 2023, and no corrections have been made for any of the errors. Wildhorse follows ASPE. Answer the following, ignoring income tax considerations. (a) Calculate the total effect of the errors on 2023 net income. Effect of errors on 2023 net income: $
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education