Question
please help me solve the requirements in good accounting form. the final anwser is already given You are engaged to audit clement company which began
please help me solve the requirements in good accounting form. the final anwser is already given
You are engaged to audit clement company which began its operation in 2017. during the audit you found out the following.
1. inventory end at 2017 and 2019 was 12,000 understated and 10,000 overstated respectively.
2. accrued interest receivable at 2017, 2018, and 2019 was 4,000 understated , 4,000 understated and 3,000 understated respectively.
3. the 30,000 rent paid on January 1,2017 applicable for two years and 6 months was charged to expense when paid. no adjustments was made at year end.
4. depreciation for 2018 was overstated by 5,000
5. on January 1,2017 clement purchased an equipment for 10,000 with a useful life of five years. on July 1,2019, the equipment was sold for 5,000. the proceeds was credited to other income. the depreciation of the equipment was properly recorded up to December 31,2018
required:
1. 2017 net income- 34, 000 understated
2. 2018 net income-27,000 overstated
3. 2019 net income-15,000 overstated
4. 2018 retained earnings-7,000 understated
5. 2019 retained earnings-8,000 overstated
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