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27 Jan 2019
Randall Co. began operations on January 1, 2015. Financialstatements for 2015 and 2016 contained the following errors: Dec.31, 2015 Dec. 31, 2016 Ending inventory $90,000 too high $114,000too high Depreciation expense 48,000 too low â Accumulateddepreciation 48,000 too low 48,000 too low Insurance expense 42,000too high 42,000 too low Prepaid insurance 36,000 too low Inaddition, on December 26, 2016 fully depreciated equipment was soldfor $58,000, but the sale was not recorded until 2017. Nocorrections have been made for any of the errors.
Instructions Ignoring income taxes, show your calculation of thetotal effect of the errors on 2016 net income.
Randall Co. began operations on January 1, 2015. Financialstatements for 2015 and 2016 contained the following errors: Dec.31, 2015 Dec. 31, 2016 Ending inventory $90,000 too high $114,000too high Depreciation expense 48,000 too low â Accumulateddepreciation 48,000 too low 48,000 too low Insurance expense 42,000too high 42,000 too low Prepaid insurance 36,000 too low Inaddition, on December 26, 2016 fully depreciated equipment was soldfor $58,000, but the sale was not recorded until 2017. Nocorrections have been made for any of the errors.
Instructions Ignoring income taxes, show your calculation of thetotal effect of the errors on 2016 net income.
Beverley SmithLv2
28 Jan 2019
