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You have been engaged to prepare audited financial statement figures for BOURNE, Inc. The records are in agreement with the following balance sheet: BOURNE, INC. Balance Sheet December 31, 2007 Assets Liabilities and Capital Cash Accounts receivable Notes receivable Inventory Equipment- net P10,000 Accounts Payable 12,000 Notes Payable 13,000 Common Stock 25,000 Additional paid-in capital 40,000 Retained Earnings P100.000 P10,000 3,000 20,000 40,000 27,000 P100.000 A review of the records of the corporation indicates that the errors and omissions listed in the table below had not been corrected during the applicable years: Inventory Overstated Understated P6,000 Inventory Depreciation Expense P250 500 150 350 Prepaid Expense P900 700 500 600 Unearned December 31 2004 2005 2006 2007 Accrued Expense P200 75 100 50 Income P7,000 8,000 P400 9,000 300 The net income according to the records is: 2005, P7,500; 2006, P6,500; and 2007, P5,500. No dividends were declared during these years, and no adjustments were made to retained earnings. Ignoring income tax effects, answer the following questions:

You have been engaged to prepare audited financial statement figures for BOURNE, Inc. The records are in agreement with the following balance sheet: BOURNE, INC. Balance Sheet December 31, 2007 Assets Liabilities and Capital Cash Accounts receivable Notes receivable Inventory Equipment- net P10,000 Accounts Payable 12,000 Notes Payable 13,000 Common Stock 25,000 Additional paid-in capital 40,000 Retained Earnings P100.000 P10,000 3,000 20,000 40,000 27,000 P100.000 A review of the records of the corporation indicates that the errors and omissions listed in the table below had not been corrected during the applicable years: Inventory Overstated Understated P6,000 Inventory Depreciation Expense P250 500 150 350 Prepaid Expense P900 700 500 600 Unearned December 31 2004 2005 2006 2007 Accrued Expense P200 75 100 50 Income P7,000 8,000 P400 9,000 300 The net income according to the records is: 2005, P7,500; 2006, P6,500; and 2007, P5,500. No dividends were declared during these years, and no adjustments were made to retained earnings. Ignoring income tax effects, answer the following questions:

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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4. What is the effect of these errors on the net working capital at the end of 2007? a. P8,000 understated b. P8,900 understated c. P 16,850 understated d. P 9,250 understated 5. What is the adjusted balance of the stockholders' equity at December 31, 2007? b. P 95,900 а. Р 95,000 с. Р 103,850 d. P 96,250
Transcribed Image Text:4. What is the effect of these errors on the net working capital at the end of 2007? a. P8,000 understated b. P8,900 understated c. P 16,850 understated d. P 9,250 understated 5. What is the adjusted balance of the stockholders' equity at December 31, 2007? b. P 95,900 а. Р 95,000 с. Р 103,850 d. P 96,250
You have been engaged to prepare audited financial statement figures for BOURNE, Inc. The records are in agreement with the following balance sheet: BOURNE, INC. Balance Sheet December 31, 2007 Assets Liabilities and Capital P10,000 Accounts Payable 12,000 Notes Payable 13,000 Common Stock 25,000 Additional paid-in capital 40,000 Retained Earnings P100.000 P10,000 3,000 20,000 40,000 27,000 Р100.000 Cash Accounts receivable Notes receivable Inventory Equipment- net A review of the records of the corporation indicates that the errors and omissions listed in the table below had not been corrected during the applicable years: Inventory Understated P6,000 Inventory Overstated Depreciation Expense P250 500 Prepaid Expense Unearned Accrued December 31 Income Expense P200 75 2004 P900 700 --- 2005 2006 P7,000 8,000 P400 150 500 100 --- 2007 9,000 350 600 300 50 The net income according to the records is: 2005, P7,500, 2006, P6,500; and 2007, P5,500. No dividends were declared during these years, and no adjustments were made to retained earnings. Ignoring income tax effects, answer the following questions:
Transcribed Image Text:You have been engaged to prepare audited financial statement figures for BOURNE, Inc. The records are in agreement with the following balance sheet: BOURNE, INC. Balance Sheet December 31, 2007 Assets Liabilities and Capital P10,000 Accounts Payable 12,000 Notes Payable 13,000 Common Stock 25,000 Additional paid-in capital 40,000 Retained Earnings P100.000 P10,000 3,000 20,000 40,000 27,000 Р100.000 Cash Accounts receivable Notes receivable Inventory Equipment- net A review of the records of the corporation indicates that the errors and omissions listed in the table below had not been corrected during the applicable years: Inventory Understated P6,000 Inventory Overstated Depreciation Expense P250 500 Prepaid Expense Unearned Accrued December 31 Income Expense P200 75 2004 P900 700 --- 2005 2006 P7,000 8,000 P400 150 500 100 --- 2007 9,000 350 600 300 50 The net income according to the records is: 2005, P7,500, 2006, P6,500; and 2007, P5,500. No dividends were declared during these years, and no adjustments were made to retained earnings. Ignoring income tax effects, answer the following questions:
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