Peter Henning Tool Company?s December 31 year-end financial statements contained the following errors. An insurance premium of
Question:
Peter Henning Tool Company?s December 31 year-end financial statements contained the following errors.
An insurance premium of $66,000 was prepaid in 2020 covering the years 2020, 2021, and 2022. The entire amount was charged to expense in 2020. In addition, on December 31, 2021, fully depreciated machinery was sold for $15,000 cash, but the entry was not recorded until 2022. There were no other errors during 2020 or 2021, and no corrections have been made for any of the errors. (Ignore income tax considerations.)
Instructions
a. Compute the total effect of the errors on 2021 net income.
b. Compute the total effect of the errors on the amount of Henning?s working capital at December 31, 2021.
c. Compute the total effect of the errors on the balance of Henning?s retained earnings at December 31, 2021.
Financial StatementsFinancial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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a Effect of errors on 2021 net income 24700 overstatement Computations Effect on 2021 net income ove...View the full answer
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Related Book For 
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
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