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- You discovered the following errors in connection with your examination of the Chapter 6 - Correction of Errors PROBLEM 6-2 Counterbalancing Errors You discovered the following errors in connection with your examination of the financial statements of Jane Corporation: Accrued rent expense of P10,000 was not recorded at the end of 2020. 2) Accrued interest receivable of P15.000 was not recorded at the end of 2020. 3) 1) S) The company paid one-year insurance premium of P24,000 effective April 1 2020. The entire amount was debited to expense account and no adjustment was made at the end of 2020. 4) The company leased a portion of its building for P48,000. The term of the lease is one year ending April 30, 2021. Collection of rent was credited to rent revenue account. At the end of 2020, no entry was made to take up the unearned portion of the amount collected. The following data were extracted from the financial statements of Jane Corporation: 2020 2021 100,000 300,000 100,000 Net income…Chapter 6 - Correction of Errors CHAPTER 6: REVIEW QUESTIONS - COMPUTATIONAL PROBLEM 6-1 Income Statement and SFP Errors You discovered the following errors in connection with your examination of the financial statements of Jessica Corporation: 1) Interest expense of P20,000 in 2020 was erroneously debited to rent expense. 2) Accounts receivable of P30,000 in 2020 was erroneously debited to notes receivable. 19 191 The following data were extracted from the financial statements of Jessica Corporation: 2s 2020 2021 wolld 100,000 300,000 100,000 150,000 400,000 250,000 Net income Working capital RE, end of the yearCorrection of errorsIn examining the books of Mulan Company, you found out that certain adjustments had been overlooked at the end of 2019 and 2020. You also discovered that other items had been improperly recorded. These omissions and other failures for each year are summarized below: 12/31/20 12/31/19Salaries payable P780,000 P873,600Interest receivable 213,000 259,200Prepaid insurance 307,800 384,000Advances from customers (Collections from customers had beenrecorded as sales but should have been recognized as advances from customers because goods were not shipped until the following year) 561,000 470,400 Machinery (Capital expenditures had been recorded as repairs but shouldhave been charged to Machinery; the depreciation rate is 10% per year, but depreciation in the year of expenditure is to be recognized at 5%) 522,000 564,000 Required:Compute for the total effect of errors in the net income of 2019 and 2020.
- 7 You were engaged by DIANE Company to audit its financial statements for the first time. In examining the books, you noted that certain adjustments had been overlooked at the end of 2020 and 2021. You also discovered that other items had been improperly recorded. These omissions and other errors for each year were summarized: 12-31-2021 12-31-2020 Salaries Payable 780,000 873,600 Interest Receivable 213,000 259,200 Prepaid Insurance 307,800 384,000 Advances from Customers 561,000 470,400 (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 522,000 564,000 (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%)…Problem 6-4: The Northrock Corporation The Northrock Corporation produced the following summary of its historical experience of write offs of Accounts Receivable (A/R) on October 31, 2021: Year A/R at Year end Uncollectible and written off in subsequent years 2018 14000 700 2019 10000 1000 2020 12000 600 2021 4000 200 Required 1. Calculate the percentage loss on Accounts Receivable for the period 2018 to 2021 by calculating total write offs over the period as a % of total A/R. Round your calculation to two decimal places. 2. Compute the balance for the Allowance for Doubtful accounts (rounded to the nearest $) on October 31, 2021 if Accounts Receivable on that date were 16000. Apply the % ending A/R method using the percentage calculated in part 1. 3. Scenario A: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 160 credit. Prepare an adjusting entry to obtain the amount that you calculated in part 2. 4. Scenario B: On October 31, 2021 the unadjusted Allowance for…PROBLEM 1 (ERROR CORRECTION) Koshu Co., a calendar year entity, contained the following independent errors at the end of each reporting period: (Amounts in thousands) 2020 50 under 2019 40 under 12 under 68 under 25 under 2018 Accounts Payable Depreciation Expense Merchandise Inventory 20 over 16 under 33 over 45 under 97 over Accrued Income 33 over 56 under Unearned Income 14 under 85 over 27 over 45 under Advances to Suppliers 105 under Advances from Customers Accounts Receivable Accrued Expense Prepaid Expense 82 over 71 under 68 under 85 under 92 over 78 under 27 under 17 over 19 over 18 under 12 under Compute for the following: a. Net adjustments on 2018 and 2020 Profits b. Effects of errors on the 2019 and 2020 Accumulated Profits c. Net adjustments to 2018 and 2019 Working Capital d. Adjusted total 2018 and 2020 Total Assets assuming unadjusted balances of total assets of 2018 and 2020 were P890 and P920, respectively e. Effects of errors on 2018 and 2019 Total Liabilities
- 8-9 You were engaged by DIANE Company to audit its financial statements for the first time. In examining the books, you noted that certain adjustments had been overlooked at the end of 2020 and 2021. You also discovered that other items had been improperly recorded. These omissions and other errors for each year were summarized: 12-31-2021 12-31-2020 Salaries Payable 780,000 873,600 Interest Receivable 213,000 259,200 Prepaid Insurance 307,800 384,000 Advances from Customers 561,000 470,400 (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 522,000 564,000 (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%)…11 The following summarizes the aging of accounts receivable for Johnston Supplies, Incorporated as of July 31, 2022 Total Accounts Receivable $ 126,800 89,500 53,900 32,100 Number of Days Unpaid Not yet due 1 to 30 days past due 31 to 60 days past duel Over 60 days past due Required: a. The unadjusted balance of the Allowance for Doubtful Accounts of Johnston Supplies, Incorporated is a credit balance in the amount of $29,037 on July 31, 2022. Prepare the required adjusting entry to record Bad Debt Expense for the year. b. Johnston Supplies, Incorporated writes off $3,111 of uncollectible accounts on August 15, 2022. Prepare the required adjusting en to record the write-off c. Use a T-account to determine the account balance in the Allowance for Doubtful Accounts on August 15, 2022 Complete this question by entering your answers in the tabs below. Historical Uncollectible View transaction list Required A Required B Required C The unadjusted balance of the Allowance for Doubtful…PROBLEM 6-5 Comprehensive You have been asked by a client to audit the financial statements of Half-Hearted Company for the first time. In examining the books, you found out that certain adjustments had been overlooked at the end of 2020 and 2021. You also discovered that other items had been improperly recorded. These omissions and other failures for each year are summarized below: 2020 2021 Merchandise inventory, end P10,000 overstated P8,000 understated Advances to supplier were recorded as purchases but the merchandise was received in the following year: Advances from customers recorded as sales but the goods were delivered in the following year: Improvements on building had been charged to expense on January 1, 2020. Improvements have 100,000 a life of 5 years. On January 1, 2020, an equipment costing P40,000 was sold for P20,000. At the date of sale, the equipment had an accumulated depreciation of P15,000. The cash received was recorded as 30,000 40,000 20,000 70,000 other…
- ermediate Accounting 1.docx Open with Google Docs The following information is available for AVS-CVN Company: Credit sales during 2019 Accounts recelvable deemed worthless and written off during 2019 Allowance for doubtful accounts at December 31, 2018 22. P 8,000,000 180,000 160,000 As a result of a revlew and aging of accounts receivable in early January 2020, however, It has been determined that an allowance for doubtful accounts of P110,000 is needed at December 31, 2019. What amount should AVS-CVN record as doubtful accounts expense for the year ended December 31, 2019? a. P130,000 b. P110,000 P90,000 d. P270,000 C. 23. Terrific Corporation, an equipment distributor, sells a piece of machinery with a list price of P800,000 to Archer Company. Per agreement, Archer will pay P850,000 in one year evidenced by a note. Terrific normally sells at cash price equivalent to 90% of list price. The note has a market rate of 12%. How much should be recorded as Sales? (The PV of 1 at 12% for 1…Problem 4 The Huawei Corporation reported the following net income: 2020-P320,000 2021 - P380,000 An investigation of the accounts in 2023 reveals the following errors: Errors a. Understatement of unused supplies b. Overstatement of merchandise inventory c. Omission of accrued wages d. Overstatement of unearned subscription income 2022-P 430,000 As of December 31 2021 2020 P 10,000 30,000 2,400 P - 50,000 7,000 3,000 1. Determine the net over/understatement of the net income of 2020, 2021 and 2022. 2. Determine the corrected net income of 2020, 2021 and 2022. 3. Prepare the necessary correcting entries as of December 31, 2022. 2022 P 5,000 8,000 4,200Question Part A Albert Trading Limited used the statement of financial position approach to estimate the impairment loss of receivable. An aging of account receivable at 31 December 2019 revealed that S68,000 of the S835,000 outstanding accounts receivable will prove uncollectible. The Allowance for Impairment has a debit balance of $6,200 prior to adjustment. Required: (Explanation of the Journal Entry is not required) Prepare an adjusting entry on 31 December 2019 to recognize the impairment loss of receivable. Part B On 12 January 2020, Peter Lee, a major customer, declared bankruptey, and Albert Trading, determined that a receivable from Peter Lee in the amount of $3,400 was worthless. Required: (Explanation of the Journal Entry is not required) Prepare the joumal entry required by Albert Trading in this situation.