The before-tax income for Hawks Corp. for 2019 was $ 115,500 ; for 2020, it was $
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Question:
The before-tax income for Hawks Corp. for 2019 was $115,500; for 2020, it was $79,000. However, the accountant noted that the following errors had been made:
1. | Sales for 2019 included $39,300 that had been received in cash during 2019, but for which the related products were delivered in 2020. Title did not pass to the purchaser until 2020. | |||||||||||||
2. | Ending inventory on December 31, 2019, was understated by $8,740. The December 31, 2020 ending inventory has not yet been adjusted to the Inventory account. Assume that Hawks has a periodic inventory system and that no adjustment has been made to the opening balance of the Inventory account. | |||||||||||||
3. | The bookkeeper, in recording interest expense for both 2019 and 2020 on bonds payable, made the following entry each year:
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4. | Ordinary repairs to equipment had been charged in error to the Equipment account during 2019 and 2020. In total, repairs in the amount of $8,800 in 2019 and $8,500 in 2020 were charged in this way. The company uses the declining balance method and applies a rate of 10% in determining its depreciation charges. |
Assume that Hawks Corp. applies IFRS.
a) Prepare a schedule showing the calculation of corrected income before tax for 2019 and 2020. Please input in format below:
b) The journal entries that the company's accountant would prepare in 2020, assuming the errors are discovered while the 2020 books are still open. Ignore income tax effects.
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