problem 5.1

PROBLEM 5.1 Since its organization of January 1, 2017 Love Company failed to properly recognize accruals and prepayments. Selected accounts revealed the following information. Accruals and Deferrals Not 2017 2018 2019 Recognized Prepaid expenses P29,000 P30,000 P34,000 Unearned revenues 20,000 28,000 15,000 Accrued expenses 27,500 25,000 27,000 Accrued revenue 42,500 45,000 41,000 Love Company reported the following profit (loss): Year Profit (Loss) 2017 P300,000 2018 (540,000) 2019 250,000 Required: Compute the corrected profit for each of the years 2017, 2018, 2019 and prepare audit adjusting entries to correct the financial statements for the year ended December 31, 2019. Follow the format provided below: Nature of Under (Over) statement in Profit of Retained error 2019 Accounts Affected 2017 2018 2019 Earnings 01/01/19 Account Dr. Cr