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P 3 - 4 1 . Accounting changes and articulation of financial statements ( L . O . 3 - 4 , L . O
P Accounting changes and articulation of financial statements LO LOMedium minutes
The following presents Echo Mike Sound Systems draft financial statements for December with comparative figures for Amounts are in $s
Balance Sheet as at December
Cash
$
$
Accounts payable
$
$
Accounts receivable gross
Current portion of longterm debt
Less: allowance for doubtful accts
Current liabilities
Inventories
Longterm debt
Current assets
Total liabilities
Land
Preferred shares
Plant and equipment net
Common shares
Goodwill
Retained earnings
Noncurrent assets
Total equity
Total assets
$
$
Total liabilities and equity
$
$
Cash flow statement for the year ended December
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Net change in cash
Cash, January
Cash, December
Income statement for the year ended December
Revenue
$
$
Operating expenses
Interest expense
Earnings before tax
Income taxes
Net income
$
$
During the company declared and paid $$ of dividends.
Required:
Before the above financial statements were finalized and issued, management found another sales invoice of $ dated December Describe how this information should be reflected in Echo Mikes financial statements. Ignore the effect of income taxes.
The company omitted to record a $ account payable for goods purchased in the fiscal year. The inventory was correctly accounted for, and the payable was recorded and paid during the fiscal year. Identify the effect of this information on the financial statements for and and record any journal entries required.
Identify two articulation errors in the financial statements above.
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