Problem 16-17 (AICPA Adapted) During the course of an audit of the financial statements of Julie Company for the year ended December 31, 2020, the following data are discovered: . Inventory on January 1, 2020 had been overstated by P300,000. Inventory on December 31, 2020 was understated by P500,000. An insurance policy covering three years had been purchased on January 1, 2019 for P150,000. The entire amount was charged as an expense in 2019. During 2020, the entity received a P100,000 cash advance from a customer for merchandise to be manufactured and shipped during 2021. The amount had been credited to sales revenue. Net income for 2020 per book was P2,000,000. What is the proper net income for 2020? a. 2,650,000 b. 2,350,000 c. 1,650,000 d. 2,050,000 * Problem 16-18 (IAA) Henson Company had determined the 2019 and 2020 net income to be P4,000,000 and P5,000,000, respectively. In a first time audit of the financial statements, the following errors are discovered: * Merchandise inventory was incorrectly determined - P50,000 overstatement for 2019 and P150,000 overstatement for 2020. * Revenue received in advance in 2019 of P300,000 was credited to a revenue account when received. Of the total, P50,000 was earned in 2019, P200,000 was earned in 2020 and the remainder will be earned in 2021. P400,000 gain on sale of equipment in 2020 was erroneously credited to retained earnings. What is the corrected net income for 2020? a. 5,500,000 b. 5,450,000 c. 5,400,000 d. 5,550,000