Langley Company's December 31 year-end financial statementscontained the following errors: Dec. 31, 2014 Dec. 31, 2015 Endinginventory $22,500 understated $33,000 overstated Depreciationexpense 6,000 understated An insurance premium of $54,000 wasprepaid in 2014 covering the years 2014, 2015, and 2016. Theprepayment was recorded with a debit to insurance expense. Inaddition, on December 31, 2015, fully depreciated machinery wassold for $28,500 cash, but the sale was not recorded until 2016.There were no other errors during 2015 or 2016 and no correctionshave been made for any of the errors. Ignore income taxconsiderations. What is the total net effect of the errors onLangley's 2015 net income? What is the total net effect of theerrors on the amount of Langley's working capital at December 31,2015? What is the total effect of the errors on the balance ofLangley's retained earnings at December 31, 2015?
Langley Company's December 31 year-end financial statementscontained the following errors: Dec. 31, 2014 Dec. 31, 2015 Endinginventory $22,500 understated $33,000 overstated Depreciationexpense 6,000 understated An insurance premium of $54,000 wasprepaid in 2014 covering the years 2014, 2015, and 2016. Theprepayment was recorded with a debit to insurance expense. Inaddition, on December 31, 2015, fully depreciated machinery wassold for $28,500 cash, but the sale was not recorded until 2016.There were no other errors during 2015 or 2016 and no correctionshave been made for any of the errors. Ignore income taxconsiderations. What is the total net effect of the errors onLangley's 2015 net income? What is the total net effect of theerrors on the amount of Langley's working capital at December 31,2015? What is the total effect of the errors on the balance ofLangley's retained earnings at December 31, 2015?
