Question
Atlanta Company reported net income for 2018 P4,000,000 and 2019 P5,000,000. An audit revealed certain errors. A collection of P100,000 from a customer was received
Atlanta Company reported net income for 2018 P4,000,000 and 2019 P5,000,000. An audit revealed certain errors.
A collection of P100,000 from a customer was received on December 29, 2019 but not recorded until January 4, 2020.
Supplier's invoice on account of P160,000 for inventory received in December 2019 was not recorded until January 2020.
Inventories on December 31, 2018 and 2019 were correctly stated.
Depreciation for 2018 was understated by P90,000.
In September 2019, a P20,000 invoice for office supplies was charged to purchases.
Office supplies are expensed when incurred.
Sales on account of P300,000 in December 2019 were recorded in 2020.
Required:
- Prepare worksheet showing corrected net income for 2018 and 2019.
- Prepare adjusting entries on December 31, 2019.
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