Reference no: EM132778095

After completing the adjusting entries but before the closing the nominal accounts as of December 31, 2020, the following errors were discovered in the records of Francisco Trading:

1. Depreciations computed on the building for the years 2018, 2019 and 2020 were overstated by P10,000 per year.

2. Cost of the minor repair on the machinery of P1,200, made on June 30, 2020, was charged to machinery account. Machinery balance is depreciated at an annual rate of 10%.

3. Unused office supplies as of December 31, 2020 of P1,250 were overlooked. The company debits office supplies expense account upon purchase of supplies.

4. 3-year insurance premium of P12,000 was paid on October 01, 2018. The amount was charged to insurance expense account and no adjustment for the unexpired premium was taken up.

5. Merchandise purchased in 2019 of P32,000, term: FOB shipping point, was taken up in the books when the goods were received in January 2020. These items were not included in the inventory count made on December 31, 2019.

6. Merchandise sale of P45,000 was delivered in 2019 and was recorded in January 2020.

7. The delivery expense of P1,800 incurred on October 01, 2020 was debited to delivery equipment account. Delivery equipment is depreciated at an annual rate of 12%.

8. Accrued rent expense of P12,000 were not taken up at the end of 2019.

Requirements:

Problem 1. Working paper of the correction of the account balances as of December 31, 2020.

Problem 2. Correcting entries as of December 31, 2020.