Question
Bench Company Benchcompanyisintheprocessofadjustingthebooksattheendof2X16.Theaccountingrecordsrevealedthefollowinginformation: Theentityfailed to accruesalescommissionsatthe endof2X14and 2X15asfollows: 2X14 220,000 2X15 140,000 Ineachcase,thesalescommissionswere paidandexpensedinJanuaryofthefollowing year. Errorsinendinginventoryforthelastthree(3)yearswerediscoveredtobeasfollows: . 2X14 400,000 Understated 2X15 540,000 Overstated 2X16 150,000
Bench Company
Benchcompanyisintheprocessofadjustingthebooksattheendof2X16.Theaccountingrecordsrevealedthefollowinginformation:
- Theentityfailed to accruesalescommissionsatthe endof2X14and 2X15asfollows:
| 2X14 | 220,000 |
| 2X15 | 140,000 |
Ineachcase,thesalescommissionswere paidandexpensedinJanuaryofthefollowing year.
- Errorsinendinginventoryforthelastthree(3)yearswerediscoveredtobeasfollows:
.
| 2X14 | 400,000 | Understated |
| 2X15 | 540,000 | Overstated |
| 2X16 | 150,000 | Understated |
TheunadjustedretainedearningsbalanceonJanuary1,2X16isP12,600,000,andtheunadjustednetincomefor2X16was P3,000,000.
DividendsofP1,750,000weredeclaredduring2X16.
Procedure:
- OpenMS Excelandstarta newworksheet.Then,computeforthefollowing:
- Adjustednetincomefor2X16
- Adjustedretainedearningsfor2X16
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Fundamental Financial Accounting Concepts
Authors: Thomas Edmonds
7th Edition
73527122, 978-0073527123
