What is the total effect of the errors on the amount of work

Assignment Help Financial Accounting

Reference no: EM132661336

JYD Company began operations on January 1, 2018. Financial statements for the years ended December 31, 2018 and 2019 contained the following errors:

                                           2018          2019
Ending inventory            320,000 understated    300,000 overstated
Depreciation expense 120,000 understated
Insurance expense 200,000 overstated 200,000 understated
Prepaid Insurance    200,000 understated

In addition, on December 31, 2019, fully depreciated machinery was sold for P220,000 cash but the sale was not recorded until 2020. No corrections have been made for any of the errors. Ignore income tax.

Question 1: What is the effect of the error on 2019 net income?

Question 2: What is the total effect of the errors on the amount of working capital at December 31, 2019.

Question 3: What is the total effect of the errors on the balance of retained earnings at December 31, 2019.

Reference no: EM132661336

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