Reference no: EM132978108
Problem 1- Benson Company had determined the 2014 and 2015 net income a be P4,000,000 and P5,000,000, respectively.
In a first time audit of the financial statements, the following errors are discovered:
Merchandise inventory was incorrectly determined - P50,000 overstatement for 2014 and P150,000 overstatement for 2015,
Revenue received in advance in 2014 of P300,000 was credited to a revenue account when received
Of the total P50,000 was earned in 2014. P200,000 was earned in 2015 and the remainder will be earned in 2016,
P400,000 gain on sale of plant asset in 2015 was erroneously credited to retained earnings.
What is the corrected net income for 2015?
a. 5,500,000
b. 5,450.000
c. 5,400,000
d. 5,550,000
Problem 2 - Conn Company reported a retained camnings balance of P4,000,000 on January 1, 2015. In 2015, the entity determined that insurans premiums of P900,000 for the three-year period beginning January 1, 2014 had been paid and fully expensed in 2014. income tax rate is 30%.
What amount should be reported as corrected retained earnings on January 1, 2015?
a. 3,400,000
b. 4,420,000
c. 4,600,000
d. 3,580,00
Problem 3 - Canal Company reported the following net income:
2014 6,000,000
2015 6,500,000
In the determination of the net income, the following items are ignored:
2014 2015
Prepaid insurance 100,000 150,000
Accrued salaries 50,000 200,000
Unearned rental income 250,000 450,000
Accrued interest receivable 300,000 400,000
What is the corrected net income for 2015?
a. 6,100,000
b. 6,300.000
c. 6,400,000
d. 6,500,000