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You are engaged in the audit of Company reported the following net income for 2019 to 2021: 2021: 800,000 2019: 600,000 2020: 700,000 A review of the company's books indicates that the following errors omissions had not been corrected during the applicable years: 2019 2020 2021 1,000 2,000 10,000 1,500 600 Prepaid expenses Unearned income 3,000 Ending inventory understated Ending inventory overstated 20,000 25,000 On January 1, 2020, P30,000 cash was received when it sold an equipment a cost of P100,000 and accumulated depreciation of P60,000. The com credited the equipment when it sold the asset. Depreciation of 10% was proL on the remaining balance of the equipment in 2020 but not in 2021.

You are engaged in the audit of Company reported the following net income for 2019 to 2021: 2021: 800,000 2019: 600,000 2020: 700,000 A review of the company's books indicates that the following errors omissions had not been corrected during the applicable years: 2019 2020 2021 1,000 2,000 10,000 1,500 600 Prepaid expenses Unearned income 3,000 Ending inventory understated Ending inventory overstated 20,000 25,000 On January 1, 2020, P30,000 cash was received when it sold an equipment a cost of P100,000 and accumulated depreciation of P60,000. The com credited the equipment when it sold the asset. Depreciation of 10% was proL on the remaining balance of the equipment in 2020 but not in 2021.

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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PROBLEM 6-6 Comprehensive Company reported the following net income for 2019 to 2021: 2021: 800,000 2019: 600,000 2020: 700,000 A review of the company's books indicates that the following errors and omissions had not been corrected during the applicable years: 2019 2020 2021 1,000 2,000 10,000 1,500 600 Prepaid expenses Unearned income 3,000 Ending inventory understated Ending inventory overstated 20,000 25,000 On January 1, 2020, P30,000 cash was received when it sold an equipment with a cost of P100,000 and accumulated depreciation of P60,000. The company credited the equipment when it sold the asset. Depreciation of 10% was provided on the remaining balance of the equipment in 2020 but not in 2021.
Transcribed Image Text:PROBLEM 6-6 Comprehensive Company reported the following net income for 2019 to 2021: 2021: 800,000 2019: 600,000 2020: 700,000 A review of the company's books indicates that the following errors and omissions had not been corrected during the applicable years: 2019 2020 2021 1,000 2,000 10,000 1,500 600 Prepaid expenses Unearned income 3,000 Ending inventory understated Ending inventory overstated 20,000 25,000 On January 1, 2020, P30,000 cash was received when it sold an equipment with a cost of P100,000 and accumulated depreciation of P60,000. The company credited the equipment when it sold the asset. Depreciation of 10% was provided on the remaining balance of the equipment in 2020 but not in 2021.
1. The correcting entry on the sale of equipment will require a Debit to Retained earnings of P3,000. b. Debit to accumulated depreciation of P53,000. Credit to equipment of P63,000. d. Debit to loss on sale of P10,000. а. с. 2. The corrected net income in 2019 a. P609,000 b. P607,000 c. P599,000 d. P608,000 3. The effect of the error in the 2019 working capital a. P2,000 overstated b. P7,000 understated c. P10,000 understated d. P9,000 understated
Transcribed Image Text:1. The correcting entry on the sale of equipment will require a Debit to Retained earnings of P3,000. b. Debit to accumulated depreciation of P53,000. Credit to equipment of P63,000. d. Debit to loss on sale of P10,000. а. с. 2. The corrected net income in 2019 a. P609,000 b. P607,000 c. P599,000 d. P608,000 3. The effect of the error in the 2019 working capital a. P2,000 overstated b. P7,000 understated c. P10,000 understated d. P9,000 understated
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