Your examination of the financial statements of Chan Corporation revealed the following errors were made in the preparation of the 2017 financial statements: a. The depreciation expense in 2017 was recorded as P100,000, instead of P10,000 b. Sales made in December 2017 for P150,000 were recorded in January 2018 c. Rent paid on April 30, 2017 covering a one-year period was recognized as expense in 2017. Unexpired portion of P40,000 was not recorded at year-end d. Advances from customers amounting to P25,000 were recognized as sales in 2017. The goods were shipped in 2018. e. Salaries totaling to P50,000 was not recorded at year-end. The expense was recorded upon payment in 2018. f. Collections of accounts receivable in 2017 amounting to P20,000 were recorded in 2018. g. The unadjusted net income for 2017 is P650,000 Required: What is the net effect of the errors in the working capital at the end of 2017 and 2018?
Topic: Financial Accounting Review: Error Correction, Cash, Accrual and Single-Entry Method
Your examination of the financial statements of Chan Corporation revealed the following errors were made in the preparation of the 2017 financial statements:
a. The
b. Sales made in December 2017 for P150,000 were recorded in January 2018
c. Rent paid on April 30, 2017 covering a one-year period was recognized as expense in 2017. Unexpired portion of P40,000 was not recorded
at year-end
d. Advances from customers amounting to P25,000 were recognized as sales in 2017. The goods were shipped in 2018.
e. Salaries totaling to P50,000 was not recorded at year-end. The expense was recorded upon payment in 2018.
f. Collections of
g. The unadjusted net income for 2017 is P650,000
Required:
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
