What is the net effect of the errors in FIERY’s December 31 retained earnings balance? A. Overstated by ₱ 15,400 B. Overstated by ₱ 11,800 C. Understated by ₱ 20,300 D. Overstated by ₱ 20,300
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What is the net effect of the errors in FIERY’s December 31 retained earnings balance?
![FIERY Company's December 31 year-end financial statements had the following errors:
December 31, 2021
December 31, 2020
13,500 understated
19,800 overstated
Ending inventory
Depreciation expense
Unearned rental
3,600 understated
5,000 Understated
Prepaid advertising
8,000 understated
There were no other errors during the years 2020 and 2021 and no corrections have been made for any
of the errors.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0fb14151-e541-4f3e-8624-ae89145d84a8%2F7f32a3ff-46ac-4c29-b179-cf2d0224a087%2F57zl6o_processed.png&w=3840&q=75)
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- Bonghill Company’s December 31 year-end financial statements had the following error: December 31, 2019 December 31, 2020 Ending Inventory 13,500 understated 19,800 overstated Depreciation expense 3,600 understated - Unearned rental 5,000 understated - Prepaid insurance - 8,000 understated There were no other errors during the years 2019 or 2020 and no corrections have been made for any of the errors. (Ignore income tax considerations) What is the net effect of the errors in Bonghill’s December 31, 2020 accumulated profits balance?(Error Analysis) Peter Henning Tool Company's December 31 year-end financial statements contained the following errors. December 31, 2020 December 31, 2021 Ending inventory $9,600 understated $8,100 overstated Depreciation expense $2,300 understated — 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…Aljohn Company's year-end financial statements contained the following errors: 12.31.2021 12.31.2022 Ending inventory P95,000 understated P800,000 overstated Depreciation P250,000 understated An insurance premium of P600,000 was prepaid in 2021 covering the years 2021, 2022, and 2023. The entire amount was charged to expense in 2021. In addition, on December 31, 2022, fully depreciated machinery was sold for P150,000 cash, but the entry was not recorded until 2022. No corrections have been made for any of the errors. Ignore income tax. What was the total effect of the errors on retained earnings on December 31, 2022?
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