At the end of Year 1, Schule Company incorrectly recorded notes payable as accounts payable. The error
Fantastic news! We've Found the answer you've been seeking!
Question:
At the end of Year 1, Schule Company incorrectly recorded notes payable as accounts payable. The error was discovered during Year 3. The company’s Year 3 annual report includes comparative financial statements covering Years 2 and 3.
The company should:
a) Record a journal entry to correct the notes payable and accounts payable balances.
b) Retrospectively restate the Year 2 balance sheet to reflect the correction.
c) Report the correction as a prior period adjustment to the beginning balance of retained earnings reported for Year 2.
d) Include the nature of the error in a disclosure note.
Related Book For
Intermediate Accounting
ISBN: 978-0324659139
11th edition
Authors: Loren A. Nikolai, John D. Bazley, Jefferson P. Jones
Posted Date: