Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Langley Company's December 31 year-end financial statements contained the following errors: Dec. 31, 2020 Dec. 31, 2021 Ending inventory $37,500 understated $55,000 overstated Depreciation expense

image text in transcribed
Langley Company's December 31 year-end financial statements contained the following errors: Dec. 31, 2020 Dec. 31, 2021 Ending inventory $37,500 understated $55,000 overstated Depreciation expense 10,000 understated An insurance premium of $90,000 was prepaid in 2020 covering the years 2020, 2021, and 2022. The prepayment was recorded with a debit to insurance expense. In addition, on December 31, 2021, fully depreciated machinery was sold for $47,500 cash, but the sale was not recorded until 2022. There were no other errors during 2021 or 2022 and no corrections have been made for any of the errors. Ignore income tax considerations. What is the total net effect of the errors on Langley's 2021 net income

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing And Assurance Services

Authors: Timothy J Louwers, Robert J. Ramsay, David Sinason, Jerry R Strawser

1st Edition

0072954442, 9780072954449

More Books

Students also viewed these Accounting questions