Error Analysis. You have been assigned to examine the financial statements of the GDK and Mohammed Al Ali Company for the year ended December 31, 2020. You discover the following situations:
1. The accumulated depreciation account of office equipment had a balance of 90,000. Depreciation of 3,000 was not recorded.
2. The physical inventory count on December 31 2019 improperly excluded 6,000 of purchases of merchandise that was stored at a public warehouse.
3. A collection advance from a customer of 80,000 was debited to cash and credited to accounts receivable. Services provided for the advance amounted to 20,000. The remaining balance of services had not yet been provided.
4. The Company provided services to a customer amounting to 200,000 on account for which the customer made a down payment of 40,000. The books showed a debit to unearned revenue 40,000, a credit to accounts receivable of 160,000 and a debit to cash 200,000.
5. The merchandise inventory had a balance of 120,000 at year end. The physical inventory count at year end showed a merchandise inventory balance of 80,000. Cost of goods sold of 40,000 was not recorded on the sale of merchandise.
6. The rent for an apartment of 24,000 was paid October 1 for 12 month period. The prepaid rent balance at year end was 18,000.
7. Expenses for Utilities of 2,000 were paid in the current year and recorded. However telephone expenses of 4,000 were not recorded since the company did not have an invoice from the supplier.
8. The company pays the secretary 500 for a five day week. Accrued wages for two days work were not recorded at year end.
Required:
Review the above transactions and prepare corrections, if any.
1. The accumulated depreciation account of office equipment had a balance of 90,000. Depreciation of 3,000 was not recorded.
2. The physical inventory count on December 31 2019 improperly excluded 6,000 of purchases of merchandise that was stored at a public warehouse.
3. A collection advance from a customer of 80,000 was debited to cash and credited to accounts receivable. Services provided for the advance amounted to 20,000. The remaining balance of services had not yet been provided.
4. The Company provided services to a customer amounting to 200,000 on account for which the customer made a down payment of 40,000. The books showed a debit to unearned revenue 40,000, a credit to accounts receivable of 160,000 and a debit to cash 200,000.
5. The merchandise inventory had a balance of 120,000 at year end. The physical inventory count at year end showed a merchandise inventory balance of 80,000. Cost of goods sold of 40,000 was not recorded on the sale of merchandise.
6. The rent for an apartment of 24,000 was paid October 1 for 12 month period. The prepaid rent balance at year end was 18,000.
7. Expenses for Utilities of 2,000 were paid in the current year and recorded. However telephone expenses of 4,000 were not recorded since the company did not have an invoice from the supplier.
8. The company pays the secretary 500 for a five day week. Accrued wages for two days work were not recorded at year end.
Question 1 10 Marks Entor Analysis. You have been assigned became the financial statements of the GOK and Mohammed Ali Company for the year ended December 31, 2020. You discover the blowing stations 1. The accumulated depreciation account of tice equipment had a balence of 90,000. Depreciation of 3.000 was not recorded 2 The physical inventory count on December 31 2019 improperycluded 6000of purchases of merchandise that wil stored a public warne A colection advance from a customer of 80,000 sed to cash and credited to accounts receivable Services provided for the advance amounted to 2.000. The remaning balance of series had not yet been 4 The Company provided services to a customer amounting te 200.000 on account for which the customer made a down payment of 40,000. The books stowed a bit buneaned revenue 40,000, a credit to accounts receivable of 160.000 and a debe toca 200.000 5 The merchandise inventory had a balance of 120,000 year and the physical inventory court at year end showed a merchandise inventory balance of 80.000 Case of goods sold 40.000 was net recorded on the sale of merchandise The end for an artment of 24.00 was part Otster 1 - 12 month period. The prepaid rent balance * 7. Expenses for sites of 2.000 were paid in the current year and recorded. However iphone penses of 4.000 were not recorded in the company didnt on the scler & The company pays the secretary 500 for a feday wek comedages for his work were not recorded a year end Required Review the above transactions and prepare comections, in 1. The accumulated depreciation acount of office equipment had a balnced 90.000. Depreciation of 3.000 2 The physical inventory count on December 31 205 inproperly dude 6.000 of purchases of merchandise that is stored at a public warehouse A colection advance from a customer of 80,000 sd cash and credited to accounts receivable Services provided for the advance amounted to 2000. The remaining balance of services had not yet been 4 The Company provided services to a customer amounting 200.000 on account for which the customer made a down payment of 40.000 The boos showed a breamed revenue 40.000 a credit to accounts receivable of 160.000 andato a 200.000 II The merchandise inventory had a balance of 120.000 a year and the physical mentery court at year end showed a merchandise invertory balance of goods 40.000 was not recorded on the sale of merchandise & The art for artment of 24.000 mes paid October 18 2 mort period. The prepaid rent balance * werend was 18.000 7. Expenses for Uisilbies of 2.000 were are year and coded However iphone egerses of 4.000 were not recorded since the company did not have a nice on the supplier & The company pays the secretary 500 for a fredy Armed wages for two days work were not recorded at year end Question 1. (10 Marks) Error Analysis. You have been assigned to examine the financial statements of the GDK and Mohammed Al Ali Company for the year ended December 31, 2020. You discover the following situations: 1. The accumulated depreciation account of office equipment had a balance of 90,000. Depreciation of 3,000 was not recorded. 2. The physical inventory count on December 31 2019 improperly excluded 6,000 of purchases of merchandise that was stored at a public warehouse. 3. A collection advance from a customer of 80,000 was debited to cash and credited to accounts receivable. Services provided for the advance amounted to 20,000. The remaining balance of services had not yet been provided. 4. The Company provided services to a customer amounting to 200,000 on account for which the customer made a down payment of 40,000. The books showed a debit to unearned revenue 40,000, a credit to accounts receivable of 160,000 and a debit to cash 200,000. 5. The merchandise inventory had a balance of 120,000 at year end. The physical inventory count at year end showed a merchandise inventory balance of 80,000. Cost of goods sold of 40,000 was not recorded on the sale of merchandise 6. The rent for an apartment of 24,000 was paid October 1 for 12 month period. The prepaid rent balance at year end was 18,000 7. Expenses for Utilities of 2,000 were paid in the current year and recorded. However telephone expenses of 4,000 were not recorded since the company did not have an invoice from the supplier. 8. The company pays the secretary 500 for a five day week. Accrued wages for two days work were not recorded at year end. Required: Review the above transactions and prepare corrections, if any. 1. The accumulated depreciation account of office equipment had a balance of 90,000. Depreciation of 3,000 was not recorded Required: Review the above transactions and prepare corrections, if any. 1. The accumulated depreciation account of office equipment had a balance of 90,000. Depreciation of 3,000 was not recorded. 2. The physical inventory count on December 31 2019 improperly excluded 6,000 of purchases of merchandise that was stored at a public warehouse. 3. A collection advance from a customer of 80,000 was debited to cash and credited to accounts receivable. Services provided for the advance amounted to 20,000. The remaining balance of services had not yet been provided 4. The Company provided services to a customer amounting to 200,000 on account for which the fustomer made a down payment of 40,000. The books showed a debit to unearned revenue 40,000, a credit to accounts receivable of 160,000 and a debit to cash 200,000. 5. The merchandise inventory had a balance of 120,000 at year end. The physical inventory count at year end showed a merchandise inventory balance of 80,000. Cost of goods sold of 40,000 was not recorded on the sale of merchandise. 6. The rent for an apartment of 24,000 was paid October 1 for 12 month period. The prepaid rent balance at year end was 18,000 7. Expenses for Utilities of 2,000 were paid in the current year and recorded. However telephone expenses of 4,000 were not recorded since the company did not have an invoice from the supplier. 8. The company pays the secretary 500 for a five day week. Accrued wages for two days work were not recorded at year end
