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How much should boy retained earning be adjusted at december

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Reference no: EM132504633

Effect of Errors on Retained Earnings.

Boy Inc. is a calendar year corporation whose financial statements for 2031 and 2032 included errors as follows:

Year              Ending Inventory                Depreciation Expense

2031            P 15,000 overstated            P 12,500 overstated

2032           5,000 understated                    4,000 understated

  • Assume that purchases were recorded correctly and that no correcting entries were made in 2031 and in 2032.

Required:

Question 1: Ignoring income taxes, by how much should Boy's retained earnings be adjusted at December 31, 2032?

Option a. 13,500

Option b. 36,500

Option c. 28,500

Option d. (1,500)

Reference no: EM132504633

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