Reference no: EM133137253

Question - Correcting entries - After the adjusting entries but before the closing entries as of December 31, 2020 were prepared, the following errors are discovered in the records of HU TAO Company:

1. Depreciation computed on the building for the years 2018, 2019 and 2020 were overstated by P 12,000 per year.

2. Cost of the minor repair on the machinery of P 1,500, made on June 30, 2019, was charged to the machinery account. Machinery is being depreciated at an annual rate of 10%.

3. Unused office supplies as of December 31, 2019 of P 1,250 were overlooked. The company debits office supplies expense account upon purchase of supplies.

4. 3-year insurance premium of P 12,000 was paid on October 1, 2018. The amount was charged to insurance expense account and no adjustments for the unexpired premium had been taken up.

5. Merchandise purchased in 2019 of P 22,000, terms FOB shipping point, were 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 sold for P 45,000 was delivered in 2018 and were recorded in January 2020.

7. The delivery expense of P 1,800 incurred on October 1, 2020 was debited to delivery equipment account. Delivery equipment is being depreciated at an annual rate of 12%.

8. Accrued rent expenses were overlooked at the end of 2018, P 2,470; at the end of 2019 of P 3,450; and at the end of 2020, P 5,000.

9. As a result of errors in the physical count, inventories were overlooked by P 24,500 at December 31, 2019 and by P 27,650 at December 31, 2020.

10. On July 1, 2020, fully depreciated equipment purchased for P 21,000, was sold as scrap for P 2,500. The only entry made was to debit cash and credit delivery equipment for the scrap proceeds.

11. Advance payment of a customer in 2019 for goods to be delivered in 2020 of P 5,000. The payment was credited to accounts receivable.

12. Purchases of merchandise in 2020, FOB destination, P 24,000, were taken up in the books in 2020. This was not included in the December 31, 2020 inventory.

Required - Prepare correcting entries as of December 31, 2020.