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: $
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: $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:
$
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