INTER. ACCOUNTING - CONNECT+ALEKS ACCESS
10th Edition
ISBN: 9781264770335
Author: SPICELAND
Publisher: MCG
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In 2021, Winslow International, Inc.’s controller discovered that ending inventories for 2019 and 2020 were overstated by $220,000 and $520,000, respectively.Determine the effect of the errors on retained earnings at January 1, 2021. (Ignore income taxes.)
In December of 2019, a company received consulting services of $100,000. No entry was recorded for these service in 2019. The invoice for the services was received in January 2020 and recorded by debiting consulting expense and crediting accounts payable. This error was discovered in 2020 and was determined to be a material error. What is the impact of the error on the net income of 2019 and 2020? Provide the proper correcting journal enntry assuming a 30% tax rate.
4) Accrued taxes payable of $150,000 were not recorded at December 31, 2020. Office supplies on hand of $95,000 at December 31, 2021 were erroneously treated as expense instead of supplies inventory. Neither of these errors was discovered nor corrected. The effect of these two errors would cause retained earnings at December 31, 2021 to be in error by what amount?
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- Since it started its operations in 2019, Valdo Co. carried no allowance for doubtful accounts. Uncollectible receivables were expensed as written off and recoveries were credited to income as collected. On March 1, 2023(after the financial statements were issued), management recognized that Valdo accounting policy with respect to doubtful accounts was not correct, and determined that an allowance for doubtful accounts was necessary. Data for the five years follow: 2019 2020 2021 2022 2023 Credit sales 2,100,000 1,850,000 2,050,000 2,000,000 2,000,000 Accounts written off 20,000 40,000 130,000 22,000 113,000 The year-end balance of accounts receivable are as follows: December 31, 2022 - P1,000,000 December 31, 2023 P1,200,000 Recoveries 15,000 20,000 5,000 20,000 40,000 Bad debts are provided for as a percentage of sales. a) The percentage to be used to compute for the allowance for bad debts on December 31, 2023 would be b) How much would be the doubtful accounts expense for 2023? c)…arrow_forwardDuring 2020, Wagner Converting discovers that a computational error was made on its 2019 financial statements. The error resulted in a $150,000 understatement of 2019 net income. Upon discovering the error, Wagner's accountant promptly adds $150,000 to the company's 2020 beginning Retained Earnings balance. What impact will this have on Wagner's Retained Earnings and why will it have that impact? O It will correctly raise Retained Earnings because the error should affect the Retained Earnings account, not an income account. O It will incorrectly raise Retained Earnings because an error that impacts income must always be corrected in an income statement account. O It will correctly raise Retained Earnings; however the error should first be recorded to Income Summary which is then posted to Retained Earnings. O It will incorrectly raise Retained Earnings because such errors must be recorded to the year in which they were made, not the year in which they were discovered.arrow_forwardHow would this be recorded on an Income Statement. During 2019, Natural State's CFO noticed that bad debt expense in the 2018 income statement was $50,000 too low as a result of an accounting error made by a Natural State employee in the prior yeararrow_forward
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