Reference no: EM133044149
Question - Zaki Company reported profit of P4,000,000 and P8,000,000 in 2019 and 2020 respectively. In 2021, the following prior period errors were discovered:
The inventory on December 31, 2019 was understated by P200,000.
An equipment with an acquisition cost of P1,200,000 was erroneously charged as expense in 2019. The equipment has an estimated useful life of 5 years with no residual value. Zaki Company provides full year depreciation in the year of acquisition. The unadjusted balances of retained earnings are P8,800,000 and P16,800,000 as of December 31, 2019 and 2020, respectively.
Required -
1. How much is the correct profit in 2019?
2. How much is the correct profit of Zaki Company in 2020?
3. How much is the correct retained earnings of Zaki Company in 2020?
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