You were engaged as an independent auditor of Thomas Corporation . In the course of your examination of the accounts on December 31, 2004, the end of the accounting period, you determined that certain prepaid and accrued items were not recorded in prior years and in the current year as follows: 2002 2003 2004 Accrued expenses 4,500 7,500 6,500 Prepaid expenses 5,000 12,000 8,000 Prepaid revenues 1,200 2,750 Revenues receivable 3,000 2,500 Retained earnings at the end of 2002 amounted to P445,000 while net income for 2003 was reported at P126,000. The income summary account for 2004 shows a credit balance of P150,000 before any audit adjustments. You have verified that no dividends were declared in the two year period. 16. Compute for the corrected Retained earnings balance as of December 31, 2002. a. P 444,300 b. P 450,000 c. P 578,500 d. P 445,000
You were engaged as an independent auditor of Thomas Corporation . In the course of your examination of the accounts on December 31, 2004, the end of the accounting period, you determined that certain prepaid and accrued items were not recorded in prior years and in the current year as follows: 2002 2003 2004 Accrued expenses 4,500 7,500 6,500 Prepaid expenses 5,000 12,000 8,000 Prepaid revenues 1,200 2,750 Revenues receivable 3,000 2,500 Retained earnings at the end of 2002 amounted to P445,000 while net income for 2003 was reported at P126,000. The income summary account for 2004 shows a credit balance of P150,000 before any audit adjustments. You have verified that no dividends were declared in the two year period. 16. Compute for the corrected Retained earnings balance as of December 31, 2002. a. P 444,300 b. P 450,000 c. P 578,500 d. P 445,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You were engaged as an independent auditor of Thomas Corporation . In the course of
your examination of the accounts on December 31, 2004, the end of the accounting period, you
determined that certain prepaid and accrued items were not recorded in prior years and in the
current year as follows:
2002 2003 2004
Accrued expenses 4,500 7,500 6,500
Prepaid expenses 5,000 12,000 8,000
Prepaid revenues 1,200 2,750
Revenues receivable 3,000 2,500
was reported at P126,000. The income summary account for 2004 shows a credit balance of
P150,000 before any audit adjustments. You have verified that no dividends were declared in
the two year period.
16. Compute for the corrected Retained earnings balance as of December 31, 2002.
a. P 444,300
b. P 450,000
c. P 578,500
d. P 445,000
17. The corrected net income for the years ended December 31, 2003 and 2004 are:
2003 2004
a. P126,000 P150,000
b. P134,200 P143,750
c. P146,700 P168,000
d. P122,200 P155,750
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