Question
On December 31, 2020, Excel Corp. sold merchandise for P75,000 to Fineafle Co. The terms of the sale were net 30, FOB shipping point. The
On December 31, 2020, Excel Corp. sold merchandise for P75,000 to Fineafle Co. The terms of the sale were net 30, FOB shipping point. The merchandise was shipped on December 31, 2020 and arrived at Fineafle on January 5, 2021. Because of a clerical error, the sale was not recorded until January 2021, and the merchandise, sold at 25% markup, was included in Excel's inventory at December 31, 2020.
- As a result, Excel's cost of goods sold for the year ended December 31, 2020 was
a. Understated by P 75,000
b. Understated by P 60,000
c. Understated by P 15,000
d. Correctly stated
- Accounts payable of P32,000 was paid and erroneously recorded as debit to accounts payable and
credit to cash for P23,000. The working capital
a. Has no effect
b. Is overstated by P9,000
c. Is understated by P9,000
d. Is understated by P23,000
- A cash purchase of P5,200 was recorded as P2,500. The error had been discovered when nominal accounts were already closed to income summary, but not yet closed to the capital account. The correcting entry will require a
a. P2,700 debit to accounts receivable
b. P2,700 debit to purchases
c. P2,700 credit to purchases
d. P2,700 credit to accounts payable
- Under the periodic inventory system, the ending inventory of P65,000 was erroneously recorded as P56,000. The error had been discovered when all nominal and temporary accounts were already closed to the real account. The correcting entry would require a
a. Debit to capital account
b. Debit to income summary account
c. Credit to cost of sale
d. Credit to owner's capital
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