Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ABC Company which published several magazines is preparing its financial statements for the year ending December 31, Y1. The new accountant has discovered that an

ABC Company which published several magazines is preparing its financial statements for the year ending December 31, Y1. The new accountant has discovered that an error has been made during the year.

A 36-month subscription to a magazine was sold in August Y1 for $360. The first magazine was to be mailed on September 1, Y1 and on the first of each month for 35 additional months. In August Y1, ABC credited a revenue account for $360 when payment was received. No adjusting or correcting entry was made on December 31, Y1 or December 31, Y2.

Tasks

How does this error affect ABCs Y1 Net Income?

How does this error affect ABCs Y2 Net Income?

How does this error affect ABCs Y1 Total Liabilities balance?

How does this error affect ABCs Y2 Total Liabilities balance?

Show how this error affects the components of the accounting equation for Y1 and Y2. In other words, prove that the effect of the error affects both sides of the accounting equation (assets = liabilities + equity) equally.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

How To Audit Learn How To Become An Auditor

Authors: Mireya Knolton

1st Edition

B097KPLYBF, 979-8524922564

More Books

Students also viewed these Accounting questions

Question

find all matrices A (a) A = 13 (b) A + A = 213

Answered: 1 week ago