Auditing problem from Philippine authors

You were assigned to audit the financial statements of Fritzie Corp. as of and for the period ended December 31, 2020. This is the first time Fritzie Corp.'s financial statements are being audited since it started operations in 2018. The following summarizes your audit findings: a. The following is an analysis of the company's accumulated profits account: Date Particulars Debit Credit Balance 12/31/18 2018 Net loss 12/31/19 2019 Net Income 1/31/20 Payment of dividends 300,000 250,000 12/31/20 2020 Net Income 925,000 1,175,00b. No dividends were declared in 2018. Dividends declared in December 2019 and 2020 were paid on January of the following years. The 2020 dividends were at P500,000. c. The following items were omitted at each year end: 2018 2019 2020 Unearned royalty income P50,000 P40,000 P20,000 Prepaid advertising expense 30,000 - 25,000 Accrued utilities - 20,000 40,000 d. A three-year fire insurance amounting to P90,000 was paid and recognized as expense on June 30, 2018. The insurance however covers the period July 1, 2018 to June 30, 2021. e. An equipment with a cost of P240,000 was fully expensed in September 30, 2018. Based on your discussions with the management, the cost should have been capitalized and depreciated using straight-line method over its eight-year useful life. Requirements: 37. What is the adjusted net income in 2018? a. 317,500 c. 280,000 b. 147,500 d. 455,500 38. What is the adjusted net income in 2020? a. 825,000 c. 890,000 b. 805,000 d. 895,000 39. What is the retroactive adjustment to the retained earnings beginning 2020? a. 417,500 c. 112,500 b. 317,500 d. 92,500 40. What is the adjusted retained earnings on December 31, 2020? a. 827,500 c. 952,500 b. 852,500 d. 982,500 41. What is the effect of the errors in 2020 working capital? a. 20,000 over c. 520,000 under b. 20,000 under d. 520,000 over