ACCOUTING PRIN SET LL INCLUSIVE
14th Edition
ISBN: 9781119815327
Author: Weygandt
Publisher: WILEY
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Roxas Company reported the following net income: 2018 - P1,750,000 2019 - P2,000,000 An examination of the accounting records for the year ended December 31, 2019 revealed that several errors were made. The following errors were discovered: • The footings and extensions showed that the inventory on December 31, 2018 was overstated by P190,000. • Prepaid insurance of P120,000 applicable to 2020 was expensed in 2019. • Interest receivable of P20,000 was not recorded on December 31, 2019. . On January 1, 2019, an equipment costing P400,000 was sold for P220,000. At the date of sale, the equipment had accumulated depreciation of P240,000. • The cash received was recorded as miscellaneous income in 2019. . In addition, depreciation was recorded for the equipment for 2019 at the rate of 10%. Required: 1. Prepare worksheet showing corrected net income for 2018 and 2019. 2. Prepare adjusting entries on December 31, 2019 assuming (a) books are still open and (b) books are already closed.
On December 31, 2021, Alan and Company prepared an income statement and balance sheet but failed to take into account four
adjusting journal entries. The income statement, prepared on this incorrect basis, reported income before income tax of $30,000. The
balance sheet (before the effect of income taxes) reflected total assets, $90,000; total liabilities, $40,000; and stockholders' equity,
$50,000. The data for the four adjusting journal entries follow:
a. Amortization of $8,000 for the year on software was not recorded.
b. Salaries and Wages amounting to $17,000 for the last three days of December 2021 were not paid and not recorded (the next
payroll will be on January 10, 2022).
c. Rent revenue of $4,800 was collected on December 1, 2021, for office space for the three-month period December 1, 2021, to
February 28, 2022. The $4,800 was credited in full to Deferred Revenue when collected.
d. Income taxes were not recorded and not paid. The income tax rate for the company is 30%.…
On December 31, 2021, Alan and Company prepared an income statement and balance sheet but failed to take into account four
adjusting journal entries. The income statement, prepared on this incorrect basis, reported income before income tax of $32,000. The
balance sheet (before the effect of income taxes) reflected total assets, $94,000; total liabilities, $42,000; and stockholders' equity,
$52,000. The data for the four adjusting journal entries follow:
a. Amortization of $8,400 for the year on software was not recorded.
b. Salaries and Wages amounting to $17,400 for the last three days of December 2021 were not paid and not recorded (the next
payroll will be on January 10, 2022).
c. Rent revenue of $5,400 was collected on December 1, 2021, for office space for the three-month period December 1, 2021, to
February 28, 2022. The $5,400 was credited in full to Deferred Revenue when collected.
d. Income taxes were not recorded and not paid. The income tax rate for the company is 25%.…
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Similar questions
- Ray Company, your client, failed to record accrued rent income of P 25,000 as of December 31, 2022. Based on the foregoing, answer the following questions: Question 1: Which of the following accounts is(are) understated by P 25,000 at the end of year 2022 as a result of the error? Question 2: Which of the following accounts is(are) overstated by P 25,000 at the end of year 2023 as a result of the error? Question 3: What would be the adjusting entry if the error is discovered in year 2022? Question 4: What would be the adjusting entry if the error is discovered in year 2023? Question 5: What would be the adjusting entry if the error is discovered in year 2024?arrow_forwardOceanside Company uses the balance sheet approach in estimating uncollectible accounts expense. It has just completed an aging analysis of accounts receivable at December 31, 2019. This analysis disclosed the following information: Age Group Total Percentage Considered Uncollectible Not Yet Due 1 - 30 days past due $52,000 $32,000 $13,000 1% 2% 8% 31 - 60 days past due What is the appropriate balance for Oceanside's Allowance for Impairment at December 31, 2019 O A. $1,560 O B. $2,160 O C, 2% of credit sales in 2019 O D. $95,000arrow_forwardWhen preparing adjusting entries at December 31, 2022, DC Co. discovered that sales salaries of $65,000 had not been accrued at December 31 2021. If the error is not corrected, what is the effect on the 2021 and 2022 comparative financial statements? Question 11Answer a. Salaries and Wages Expense and total liabilities are understated in 2021. Salaries and Wages Expense and total liabilities are overstated in 2022. Retained Earnings is understated in 2021 and overstated in 2022. b. Salaries and Wages Expense is overstated in 2021 and understated in 2022. Retained Earnings is overstated and total liabilities are understated in 2021 but properly stated in 2022. c. Salaries and Wages Expense is understated in 2021 and overstated in 2022. Retained Earnings is overstated and total liabilities are understated in 2021 but properly stated in 2022. d. Salaries and Wages Expense and total liabilities are understated in 2021. Salaries and Wages Expense…arrow_forward
- 1. What is the adjusted net income for 2019?*arrow_forwardAccounting Gowns, Inc. uses 'the percentage of receivables' basis to estimate its impairment loss. At December 31, 2020, per the accounts receivable aging report, Gowns estimates total uncollectible amounts in the future as $5,500. The beginning balance of allowance for impairment is $1,300. The accounts receivable balance at December 31, 2020 is $100,000. What is the amount of impairment loss for the year? Select one: $4,200 $5,500 $6,800 $1,300arrow_forwardPatrick Company had the following information in 2021: E (Click the icon to view the information.) If uncollectible accounts are determined by the aging-of-receivables method to be $1,280, the uncollectible account expense for 2021 would be $480. Using the aging-of-receivables method, the balance of the Allowance account after the adjusting entry at year-end 2021 would be - X Data table O A. $800. B. $1,280. Accounts receivable 12/31/21 %24 13,000 OC. $520. OD. $480. Allowance for uncollectible-accounts credit balance 12/31/21 (before adjustment) 800 Credit service revenue during 2021 43,000 Cash service revenue during 2021 13,000 Collections from customers on account during 2021 42,000 Print Donearrow_forward
- Prepare correcting entries as of December 31, 2020 7. The delivery expense of P 1,800 incurred on October 1, 2020 was debited to delivery equipment account. Delivery equipment is being depreciated at an annual rate of 12%. 8. Accrued rent expenses were overlooked at the end of 2018, P 2,470; at the end of 2019 of P 3,450; and at the end of 2020, P 5,000. 9. As a result of errors in the physical count, inventories were overlooked by P 24,500 at December 31, 2019 and by P 27,650 at December 31, 2020. 10. On July 1, 2020, fully depreciated equipment purchased for P 21,000, was sold as scrap for P 2,500. The only entry made was to debit cash and credit delivery equipment for the scrap proceeds. 11. Advance payment of a customer in 2019 for goods to be delivered in 2020 of P 5,000. The payment was credited to accounts receivable. 12. Purchases of merchandise in 2020, FOB destination, P 24,000, were taken up in the books in 2020. This was not included in the December 31,…arrow_forwardRequired: (a) Prepare journal entries to record the impairment loss of receivable in 2021 under Statement of Financial Position approach. (b) Prepare partial Statement of Financial Positions to show the accounts receivables at 31 December 2021.arrow_forwardSantana Rey, owner of Business Solutions, realizes that she needs to begin accounting for bad debts expense. Assume that Business Solutions has total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Required 1. Prepare the adjusting entry to record bad debts expense on March 31, 2020, under each separate assumption. There is a zero unadjusted balance in the Allowance for Doubtful Accounts at March 31. a. Bad debts are estimated to be 1% of total revenues. b. Bad debts are estimated to be 2% of accounts receivable. (Round to the dollar.) 2. Assume that Business Solutions’s Accounts Receivable balance at June 30, 2020, is $20,250 and that one account of $100 has been written off against the Allowance for Doubtful Accounts since March 31, 2020. If Rey uses the method in part 1b, what adjusting journal entry is made to recognize bad debts expense on June 30, 2020? 3. Should Rey consider adopting the direct…arrow_forward
- At December 31, 2022, the records of Kingbird, Inc. contained the following amounts before adjustment. Accounts Receivable Allowance for Doubtful Accounts (a) What amount of bad debt expense will Kingbird, Inc. report if its aging schedule indicates that $12,240 of accounts receivable will be uncollectible. Bad debt expense $ $216,000 1,800 (b) During the next month, January 2023, a $2,520 account receivable is written off as uncollectible. What amount of bad debt expense will Kingbird, Inc. report in January 2023? Bad debt expense $ (c) Repeat part (b), assuming that Kingbird, Inc. uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable. Bad debt expense $arrow_forwardTyndal Company had the following items that required adjustment at December 31, 2019.a. Purchased equipment for $40,000 on January 1, 2019. Tyndal estimates annual depreciationexpense to be $3,100.b. Paid $2,400 for a 2-year insurance policy on July 1, 2019. The amount was debited to PrepaidInsurance when paid.c. Collected $1,200 rent for the period December 1, 2019 to March 30, 2020. The amount wascredited to Unearned Service Revenue when received.Required:1. Prepare the adjusting entries needed at December 31.2. CONCEPTUAL CONNECTION What is the effect on the financial statements if theseadjusting entries were not made?arrow_forwardAfter completing the adjusting entries but before closing the nominal accounts as of December 31, 2020, the following errors were discovered in the records of Winston Corporation: 1) Depreciation computed on the building for the years 2018, 2019 and 2020 were overstated by P10,000 per year. 2) Cost of the minor repair on the machinery of P1,200, made on June 30, 2019, was charged to Machinery account. Machinery balance is depreciated at an annual rate of 10%. 3) Unused office supplies as of December 31, 2019 of P1,250 were overlooked. The company debits Office supplies expense upon purchase of supplies. 4) 3-year insurance premium of P12,000 was paid on October 1, 2018. The amount was charged to Insurance expense account and no adjustment for the unexpired premium was taken up. 5) Merchandise purchased on 2019 of P32,000, term: FOB shipping point, was taken up in the books when the goods were received in January 2020. These items were not included in the inventory count made on…arrow_forward
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