question archive Karen Company reported net income for a 2-years period as follows: 2017 - Php 120,000 2018 - Php 180,000 In an audit of the financial statement for the year ended December 31, 2017, the following errors were discovered: Advances to supplier in 2017 were recorded as purchases but the merchandise was received in the following year - Php 20,000 Advances from customers in 2017 recorded as sales in 2017 but the goods were delivered in the following year - Php 50,000 On December 31, the ending inventory was overstated by Php 25,000 Required: Answer the following: Compute for the adjusted net income in 2017 and 2018 and the Retained Earnings as of December 31, 2017 and 2018
Karen Company reported net income for a 2-years period as follows: 2017 - Php 120,000 2018 - Php 180,000 In an audit of the financial statement for the year ended December 31, 2017, the following errors were discovered: Advances to supplier in 2017 were recorded as purchases but the merchandise was received in the following year - Php 20,000 Advances from customers in 2017 recorded as sales in 2017 but the goods were delivered in the following year - Php 50,000 On December 31, the ending inventory was overstated by Php 25,000 Required: Answer the following: Compute for the adjusted net income in 2017 and 2018 and the Retained Earnings as of December 31, 2017 and 2018
Subject:AccountingPrice:4.87 Bought7
Karen Company reported net income for a 2-years period as follows:
2017 - Php 120,000 2018 - Php 180,000
In an audit of the financial statement for the year ended December 31, 2017, the following errors were discovered:
- Advances to supplier in 2017 were recorded as purchases but the merchandise was received in the following year - Php 20,000
- Advances from customers in 2017 recorded as sales in 2017 but the goods were delivered in the following year - Php 50,000
- On December 31, the ending inventory was overstated by Php 25,000
Required: Answer the following:
- Compute for the adjusted net income in 2017 and 2018 and the Retained Earnings as of December 31, 2017 and 2018.
- Give the effect of the error in the 2017 working capital
- Prepare the adjusting entries assuming the respective errors were discovered in (a) 2017; (b) 2018 and (c) 2019.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer:
Net income 2017 :65,000
Net income 2018 :235,000
Adjusted Retained Earning 2017:65,000
Adjusted Retained Earning 2018:300,000
Effect to working capital 2017: Overstated by 55,000
Please refer to attach file for the solution:
Step-by-step explanation
PFA
