Solution and computation

PROBLEM 6-2 Counterbalancing Errors You discovered the following errors in connection with your examination of the financial statements of Jane Corporation: 1) Accrued rent expense of P10,000 was not recorded at the end of 2020. 2) Accrued interest receivable of P15,000 was not recorded at the end of 2020. 3) The company paid one-year insurance premium of P24,000 effective April 1, 2020. The entire amount was debited to expense account and no adjustment was made at the end of 2020. 4) The company leased a portion of its building for P48,000. The term of the lease is one year ending April 30, 2021. Collection of rent was credited to rent revenue account. At the end of 2020, no entry was made to take up the unearned portion of the amount collected. The following data were extracted from the financial statements of Jane Corporation: 2020 2021 Net income 100,000 150,000 Working capital 300,000 400,000 RE, end of the year 100,000 250,000 Questions: Based on the above data, determine the following: 1. Net Income in 2020 a. P95,000 c. P90,000 b. P96,000 d. P105,000 2. Working capital, end of 2020 a. P295,000 c. P305,000 b. P305,000 d. P290,000 3. Retained earnings, end of 2020 P95,000 c. P90,000 b. P96,000 d. P105,000 4. Net Income in 2021 a. P155,000 c. P145,000 b. P139,000 d. P161,000 5. Working capital, end of 2021 a. P406,000 c. P410,000 b. P400,000 d. P385,000 6. Retained earnings, end of 2021 a. P250,000 c. P244,000 b. P260,000 d. P235,000 7. Prepare adjusting entries assuming errors were discovered in (a) 2020, (b) 2021, and (c) 2022