Question
Pharoah Company's December 31 year-end financial statements contained the following errors: Dec. 31, 2017 Dec. 31, 2018 Ending inventory $42500 understated $48000 overstated Depreciation expense
Pharoah Company's December 31 year-end financial statements contained the following errors:
Dec. 31, 2017 Dec. 31, 2018
Ending inventory $42500 understated $48000 overstated
Depreciation expense 8700 understated
An insurance premium of $87000 was prepaid in 2017 covering the years 2017, 2018, and 2019. The prepayment was recorded with a debit to insurance expense. In addition, on December 31, 2018, fully depreciated machinery was sold for $50500 cash, but the sale was not recorded until 2019. There were no other errors during 2018 or 2019 and no corrections have been made for any of the errors. Ignore income tax considerations.
How do you solve for working capital in 2018?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started