EBK ACCOUNTING, CHAPTERS 1-13
27th Edition
ISBN: 9781337514088
Author: WARREN
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 17, Problem 17.25EX
(a)
To determine
Ensure Company CC has reported right to rectify the clerical error.
(b)
To determine
Ensure correct reporting of change in method of accounting.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Explain whether Colston Company correctly reported the following items in the financial statements:a. In a recent year, the company discovered a clerical error in the prior year’s accounting records. As a result, the reported net income for the previous year was overstated by $45,000. The company corrected this error by restating the prior-year financial statements.b. In a recent year, the company voluntarily changed its method of accounting for longterm construction contracts from the percentage of completion method to the completed contract method. Both methods are acceptable under generally acceptable accounting principles. The cumulative effect of this change was reported as a separate componentof income in the current period income statement.
You were engaged by Lanao Company to audit its financial statements for the first time. In
examining the books, you found out that certain adjustments had been overlooked at the end of
2014 and 2015. You also discovered that other items had been improperly recorded. These omissions and
other failures for each year are summarized below:
12/31/15 12/31/14
P780,000 P873,600
213,000
307,800
Salaries payable
Interest receivable
259,200
384,000
Prepaid insurance
Advances from customers (Collections from customers had been
recorded as sales but should have been recognized as advances from
customers because goods were not shipped until the following year)
Machinery
(Capital expenditures had been recorded as repairs but should have
been charged to Machinery; the depreciation rate is 10% per year, but
depreciation in the year of expenditure is to be recognized at 5%)
561,000
470,400
522,000
564,000
Based on the above and the result of your audit, answer the following:
1. What is the total effect…
Rayan Company, a CPA firm, conducted an audit for the 2020 financial statements of Tia Corporation. During the course of the audit, the auditors noticed that repairs and maintenance expenses were recorded as an addition to fixed assets to decrease expenses amount in the financial statements. Which one of the following assertions was violated?
Occurrence
Completeness
Existence
Accuracy
None of the above
Chapter 17 Solutions
EBK ACCOUNTING, CHAPTERS 1-13
Ch. 17 - Prob. 1DQCh. 17 - Prob. 2DQCh. 17 - A companys current year net income (after income...Ch. 17 - How would the current and quick ratios of a...Ch. 17 - Prob. 5DQCh. 17 - What do the following data, taken from a...Ch. 17 - a. How does the return on total assets differ from...Ch. 17 - Kroger, a grocery store, recently had a price-...Ch. 17 - Prob. 9DQCh. 17 - Prob. 10DQ
Ch. 17 - Horizontal analysis The comparative temporary...Ch. 17 - Prob. 17.1BPECh. 17 - Vertical analysis Income statement information for...Ch. 17 - Vertical analysis Income statement information for...Ch. 17 - Prob. 17.3APECh. 17 - Prob. 17.3BPECh. 17 - Accounts receivable analysis A company reports the...Ch. 17 - Accounts receivable analysis A company reports the...Ch. 17 - Inventory analysis A company reports the...Ch. 17 - Inventory analysis A company reports the...Ch. 17 - Prob. 17.6APECh. 17 - Long-term solvency analysis The following...Ch. 17 - Times interest earned A company reports the...Ch. 17 - Times interest earned A company reports the...Ch. 17 - Asset turnover A company reports the following:...Ch. 17 - Asset turnover A company reports the following:...Ch. 17 - Return on total assets A company reports the...Ch. 17 - Return on total assets A company reports the...Ch. 17 - Common stockholders profitability analysis A...Ch. 17 - Common stockholders profitability analysis A...Ch. 17 - Prob. 17.11APECh. 17 - Prob. 17.11BPECh. 17 - Prob. 17.1EXCh. 17 - Prob. 17.2EXCh. 17 - Common-sized income statement Revenue and expense...Ch. 17 - Vertical analysis of balance sheet Balance sheet...Ch. 17 - Horizontal analysis of the income statement Income...Ch. 17 - Current position analysis The following data were...Ch. 17 - Prob. 17.7EXCh. 17 - Current position analysis The bond indenture for...Ch. 17 - Accounts receivable analysis The following data...Ch. 17 - Accounts receivable analysis Xavier Scores Company...Ch. 17 - Inventory analysis The following data were...Ch. 17 - Inventory analysis QT, Inc. and Elppa Computers,...Ch. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Ratio of liabilities to stockholders equity and...Ch. 17 - Prob. 17.16EXCh. 17 - Profitability ratios The following selected data...Ch. 17 - Profitability ratios Ralph Lauren Corporation...Ch. 17 - Six measures of solvency or profitability The...Ch. 17 - Five measures of solvency or profitability The...Ch. 17 - Prob. 17.21EXCh. 17 - Prob. 17.22EXCh. 17 - Earnings per share, discontinued operations The...Ch. 17 - Prob. 17.24EXCh. 17 - Prob. 17.25EXCh. 17 - Prob. 17.1APRCh. 17 - Prob. 17.2APRCh. 17 - Prob. 17.3APRCh. 17 - Measures of liquidity, solvency, and profitability...Ch. 17 - Solvency and profitability trend analysis Addai...Ch. 17 - Prob. 17.1BPRCh. 17 - Prob. 17.2BPRCh. 17 - Effect of transactions on current position...Ch. 17 - Measures of liquidity, solvency and profitability...Ch. 17 - Solvency and profitability trend analysis Crosby...Ch. 17 - Financial statement analysis The financial...Ch. 17 - Prob. 17.1CPCh. 17 - Prob. 17.3CPCh. 17 - Common-sized income statements The condensed...Ch. 17 - Profitability analysis Deere Company manufactures...Ch. 17 - Comprehensive profitability and solvency analysis...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Suppose an auditor has been paid $1,000,000 each year for the past several years by a company to perform the audit of its annual financial statements. This company is the auditor’s largest client. In the current year, the auditor notices that the preliminary income statement excludes certain expenses that typically are shown. When asked, management tells the auditor that these expenses do not reflect the company’s true performance, so they will not be shown in this year’s income statement. Plus, management informs the auditor that it will be paying $1,200,000 for this year’s audit, and management commits to using the auditor for at least five more years. Required: 1. Understand the reporting effect: Does the audit arrangement described above have the potential to jeopardize the auditor’s opinion of management’s decision not to report certain expenses? 2. Specify the options: Are auditors employees of the company who must accept requests of management? 3. Identify the impact: Do…arrow_forwardThe errors below were noted after the books of CalMart Corporation were audited at the close of 2021 Indicate the effects of each of the following errors with an O for Overstatement, U for understatement and N for no effect in the appropriate column. 2020 Liability 2021 Retained before closing Earnings Retained Eamings after Net Income Liability Retained before closing Eamings Retained Earnings after closing Net Income Asset Asset closing Paid one year insurance premium of P2.000 effective April 1,2020. The entire amount was debited to expense account and no adjustment was made at the end of 2020 On December 31,2020, the Company acquired a parcel of land and a building at a total cost of P5,000,000. The entire amount paid was debited to land account. A reasonable estimate of the cost that should have been allocated to the building was P,2000,000. The building has an estimated life of 20 years. Failure to record supplies on hand at the end of 2020. The supplies on hand amounted to…arrow_forwardThe XR Company’s Financial Year Ended on December 31, 2021. However, before the completion of the audit in February 2023 it was determined the company lost a case that was at court before the end of the financial year, but the outcome was uncertain. The auditor will disclosed this information as: a. An unusual occurrence b. A tax liability for the company c. A subsequent event. d. An annual expensearrow_forward
- please answer with reasonarrow_forwardDuring an audit of Madison Company's December 31, 2020 records it was discovered that the company did not accurately accrue for $12,500 of depreciation expense. The accrual of interest expense of $4,500 was also omitted. These errors occurred in 2019 and have a material impact on Madison's financial records. Madison's net income for the year was $123,000. The company is subject to a 35% tax rate. The company had a retained earnings balance of $557,500 on January 1, 2020. No dividends were paid. 1) General Journal (8) 2) Statement of Retained Earnings (7)arrow_forwardDuring an audit of Madison Company’s December 31, 2020 records it was discovered that the company did not accurately accrue for $12,500 of depreciation expense. The accrual of interest expense of $4,500 was also omitted. These errors occurred in 2019 and have a material impact on Madison’s financial records. Madison’s net income for the year was $123,000. The company is subject to a 35% tax rate. The company had a retained earnings balance of $557,500 on January 1, 2020. No dividends were paid. Required: 1. Prepare the necessary journal entries to correct the accounting records of Madison Company’s books. 2. Prepare the statement of retained earnings for 2020.arrow_forward
- During an audit of Madison Company’s December 31, 2020 records it was discovered that the company did not accurately accrue for $12,500 of depreciation expense. The accrual of interest expense of $4,500 was also omitted. These errors occurred in 2019 and have a material impact on Madison’s financial records. Madison’s net income for the year was $123,000. The company is subject to a 35% tax rate. The company had a retained earnings balance of $557,500 on January 1, 2020. No dividends were paid. Required: 1. Prepare the necessary journal entries to correct the accounting records of Madison Company’s books. 2. Prepare the statement of retained earnings for 2020. 1. Prepare the necessary journal entries to correct the accounting records of Madison Company’s books. For grading purposes, prepare four separate entries dated December 31. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2…arrow_forwardDuring an audit of Madison Company’s December 31, 2020 records it was discovered that the company did not accurately accrue for $12,500 of depreciation expense. The accrual of interest expense of $4,500 was also omitted. These errors occurred in 2019 and have a material impact on Madison’s financial records. Madison’s net income for the year was $123,000. The company is subject to a 35% tax rate. The company had a retained earnings balance of $557,500 on January 1, 2020. No dividends were paid. Required: 1. Prepare the necessary journal entries to correct the accounting records of Madison Company’s books. For grading purposes, prepare four separate entries dated December 31. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 8arrow_forwardUpon inspection of the records of Eisenhower Company in connection to its financial statement audit for the year ended December 31, 2022, the following errors were revealed: A fire insurance premium of P 40,000 was paid and charged to insurance expense in 2021. This covers one year from April 1, 2021. Inventory at December 31, 2020 was understated by P 80,000. Inventory at December 31, 2021 was understated by P 120,000. The year 2021 last quarter taxes amounting to P 60,000 were paid on January 19, 2022 and charged to expense account of 2022. A cash advance of P 100,000 in payment of goods to be delivered in January 2022 was received on December 15, 2021 and credited to Sales. The gross profit on sales is 40%. The net income for the year ended December 31, 2021 before any adjustments is P 1,550,000. Group of answer choices 1,600,000 1,200,000 1,440,000 1,550,000arrow_forward
- What type of disclosure or accounting do you believe is necessary for the following items? a. Because of a general increase in the number of labor disputes and strikes, within and outside the industry, there is an increased likelihood that a company will suffer a costly strike in the near future. b. A company reports a material unusual and infrequent loss on the income statement. No other mention is made of this item in the annual report. C. A company expects to recover a substantial amount in connection with a pending refund claim for a prior year's taxes. Although the claim is being contested, counsel for the company has confirmed the client's expectation of recovery.arrow_forwardUpon inspection of the records of Eisenhower Company in connection to its financial statement audit for the year ended December 31, 2022, the following errors were revealed: • A fire insurance premium of P 40,000 was paid and charged to insurance expense in 2021. This covers one year from April 1, 2021. • Inventory at December 31, 2020 was understated by P 80,000. • Inventory at December 31, 2021 was understated by P 120,000. • The year 2021 last quarter taxes amounting to P 60,000 were paid on January 19, 2022 and charged to expense account of 2022. • A cash advance of P 100,000 in payment of goods to be delivered in January 2022 was received on December 15, 2021 and credited to Sales. • The gross profit on sales is 40%. • The net income for the year ended December 31, 2021 before any adjustments is P 1,550.000. 1,200,000 1,440,000 1,550,000 1,600,000arrow_forwardThe XR Company's Financial Year Ended on December 31, 2021. However, before the completion of the audit in February 2023 it was determined the company lost a case that was at court before the end of the financial year, but the outcome was uncertain. The auditor will disclosed this information as: O a. A subsequent event. O b. An unusual occurrence O c. A tax liability for the company O d. An annual expensearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Accounting Changes and Error Analysis: Intermediate Accounting Chapter 22; Author: Finally Learn;https://www.youtube.com/watch?v=c2uQdN53MV4;License: Standard Youtube License