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What is the total effect of the errors on net income

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Reference no: EM133183400

Question - BETA Company began operations in January 2021. Financial statements for the years ended December 31, 2021 and 2022 contained the following errors:

Ending inventory, 2021 - P16,000 understated

Ending inventory, 2022 - P15,000 overstated

Depreciation expense, 2021 - P6,000 understated

Insurance expense, 2021 - P10,000 overstated

Insurance expense, 2022 - P10,000 understated

Prepaid insurance, 2021 - P10,000 understated

In addition, on December 31, 2022, a fully depreciated machinery was sold for $10,800 cash, but the sale was not recorded until 2023.

There were no other errors during 2021 and 2022 and no correction have been made for any of the errors.

Required -

1. Ignoring income taxes, what is the total effect of the errors on 2021 net income?

2. Ignoring income taxes, what is the total effect of the errors on 2022 net income?

Reference no: EM133183400

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