ACTIVITY 1. ABC Company reported profits of P4,000,000 and P8,000,000 in 2021 and 2022, respectively. In 2023, the following prior period errors were discovered: a. The inventory on December 31, 2021 was understated by P200,000. b. An equipment with an acquisition cost of P1,200,000 was erroneously charged as expense in 2021. The equipment has an estimated useful life of 5 years with no residual value. ABC Company provides full year depreciation in the year of acquisition. The unadjusted balances of retained earnings are P8,800,000 and P16,800,000 as of December 31, 2011 and 2012, respectively. 1. How much is the correct profit in 2021? 2. How much is the correct profit in 2022? 3. How much is the correct retained earnings in 2021? 4. How much is the correct retained earnings in 2022? ACTIVITY 2. XYZ Company has determined the following information related to operations for 2023: Revenue from sales Expenses Income before income taxes 7,000,000 4,000,000 3,000,000 In reviewing the records, you discovered the following items: a. During 2023, the company discovered an error in depreciation in 2022. The correction of this error, which has not been recorded, will result in an increase in depreciation for 2022 of P200,000. b. During 2023, the company sustained a loss of P400,000 because of flood, which destroyed its inventory. The company charged retained earnings and credited inventory for P400,000. How much is the correct profit before tax for the year 2023? ACTIVTY 3. DEF Company showed pre-tax income of P2,500,000 for the year ended December 31, 2022. On your year-end verification of the transactions of the Company, you discovered the following errors: a. P1,000,000 worth of merchandise was purchased in 2022 and included in the ending inventory. However, the purchase was recorded only in 2023. b. A merchandise shipment valued at P1,500,000 was properly recorded as purchases at year- end. The merchandise was inadvertently omitted from the physical count, since it has not arrived by December 31, 2022. c. Value added tax for the fourth quarter of 2022, amounting to P500,000, was included in the Sales account. d. Rental of P300,000 on an equipment, applicable for six months, was received on November 1, 2022. The entire amount was reported as revenue upon receipt. e. Rent paid on building covering the period from July 1, 2022 to July 1, 2023, amounting to P1,200,000, was paid and recorded as expense on July 1, 2022. The company did not make any adjustment at the end of the year 1. The correct pre-tax profit for 2022 should 2. What is the net effect of the foregoing errors on the total assets at December 31, 2022? (use negative sign if overstated) 3. What is the total understatement of the total liabilities at December 31, 2022