Homework Answers
| a | Requirement | ||||||||
| Calculation of total effects of errors on the net income in 2018 | |||||||||
| Overstatement of net income | |||||||||
| $10500 +$15000-2400 | |||||||||
| $23,100 | |||||||||
| Therefore the net income is overstated by $23100 | |||||||||
| b | Calculation of Total Effect of Errors on the working capital in yr 2018 | ||||||||
| Understatement of working capital | |||||||||
| (2*59000/3 )-$15000 +$2400 | |||||||||
| $26,733 | |||||||||
| Therefore the working capital is understated by $26733 | |||||||||
| c | Calculation of the total effect of errors on the retained earnings in yr 2018 | ||||||||
| Understatement of retained earnings | |||||||||
| (2*59000/3)-$15000 | |||||||||
| $24,333 | |||||||||
| Therefore the retained earnings is understated by $24333 | |||||||||
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Exercise 22 18 Indigo Toal Company's December 3t year end financial statements contained the following errors....
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Exercise 22-18 Monty Tool Company's December 31 year-end financial statements contained the following errors. December 31, 2017 $9,400 understated $2,200 understated December 31, 2018 $7,900 overstated Ending inventory Depreciation expense An insurance premium of $64,800 was prepaid in 2017 covering the years 2017, 2018, and 2019. The entire amount was charged to expense in 2017. In addition, on December 31, 2018, fully depreciated machinery was sold for $16,300 cash, but the entry was not recorded until 2019. There were no...
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Nash Tool Company’s December 31 year-end financial statements
contained the following errors.
December 31, 2017
December 31, 2018
Ending inventory
$9,000 understated
$8,000 overstated
Depreciation expense
$2,300 understated
—
An insurance premium of $69,600 was prepaid in 2017 covering the
years 2017, 2018, and 2019. The entire amount was charged to
expense in 2017. In addition, on December 31, 2018, fully
depreciated machinery was sold for $15,900 cash, but the entry was
not recorded until 2019. There were no other...
Exercise 22-18 Your answer is incorrect. Try again. Kingbird Tool Company's December 31 year-end financial statements...
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Nash Tool Company’s December 31 year-end financial statements
contained the following errors.
December 31, 2017
December 31, 2018
Ending inventory
$9,000 understated
$8,000 overstated
Depreciation expense
$2,300 understated
—
An insurance premium of $69,600 was prepaid in 2017 covering the
years 2017, 2018, and 2019. The entire amount was charged to
expense in 2017. In addition, on December 31, 2018, fully
depreciated machinery was sold for $15,900 cash, but the entry was
not recorded until 2019. There were no other...
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