You have been engaged to audit the accounts of Justine Corporation for the first time in 2019. During the audit, you discovered the following information: 2018 2019 The following were omitted at each year end: Salaries Payable Accrued Interest Income 12,000 5,000 4,000 3,000 Unearned Rental Income 14,000 15,000 Prepaid Insurance Collections from customers at year-end, recorded as 3,000 5,000 sales but deliveries were not made until the following year Payments to suppliers at year-end, recorded as purchases but merchandise were not received until the following year Overstated Depreciation Recorded Ordinary Repairs Expense capitalized at a depreciation rate of 10% Unadjusted Net Income 31,000 25,000 60,000 80,000 20,000 500,000 200,000 245,000 310,000
You have been engaged to audit the accounts of Justine Corporation for the first time in 2019. During the audit, you discovered the following information: 2018 2019 The following were omitted at each year end: Salaries Payable Accrued Interest Income 12,000 5,000 4,000 3,000 Unearned Rental Income 14,000 15,000 Prepaid Insurance Collections from customers at year-end, recorded as 3,000 5,000 sales but deliveries were not made until the following year Payments to suppliers at year-end, recorded as purchases but merchandise were not received until the following year Overstated Depreciation Recorded Ordinary Repairs Expense capitalized at a depreciation rate of 10% Unadjusted Net Income 31,000 25,000 60,000 80,000 20,000 500,000 200,000 245,000 310,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
What is the effect of the errors to the
12,000
13,000
15,000
20,000
Transcribed Image Text:You have been engaged to audit the accounts of Justine Corporation for the first time in 2019. During
the audit, you discovered the following information:
2018
2019
The following were omitted at each
year
end:
Salaries Payable
12,000
5,000
Accrued Interest Income
4,000
3,000
Unearned Rental Income
14,000
15,000
Prepaid Insurance
3,000
5,000
Collections from customers at year-end, recorded as
sales but deliveries were not made until the
following year
Payments to suppliers at year-end, recorded as
purchases but merchandise were not received until
the following year
Overstated Depreciation Recorded
Ordinary Repairs Expense capitalized at a
depreciation rate of 10%
Unadjusted Net Income
31,000
25,000
60,000
80,000
20,000
500,000
200,000
245,000
310,000
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