OH NO Company is in the process of adjusting the books at the end of 2017. The accounting records revealed the following information:

The company failed to accrue sales commissions of P220,000 and P140,000 at the end of 2015 and 2016, respectively. The sales commissions were paid and expensed in January of the following year.

Errors in ending inventory for the last three years: 2015 400,000 understated 2016 540,000 overstated 2017 150,000 understated The unadjusted retained earnings balance on January 1, 2017 is P12,600,000 and the unadjusted net income for 2017 was P3,000,000. Dividends of P1,750,000 were declared during 2017. 1. What is the adjusted net income for 2017? A. 3,830,000 B. 3,150,000 C. 3,680,000 D. 3,530,000 2. What is the adjusted balance of retained earnings on December 31, 2017? A. 14,000,000 B. 13,320,000 C. 13,850,000 D. 11,000,000

SHOW SOLUTION