81. Langley Company's December 31 year-end financial statements contained the following errors: Ending inventory Depreciation expense Dec. 31, 2023 $37,500 understated 10,000 understated Dec. 31, 2024 $55,000 overstated An insurance premium of $90,000 was prepaid in 2023, covering the years 2023, 2024, and 2025. The prepayment was recorded with a debit to insurance expense. In addition, on December 31, 2024, fully depreciated machinery was sold for $47,500 cash, but the sale was not recorded until 2025. There were no other errors during 2024 or 2025, and no corrections have been made for any of the errors. Ignore income tax considerations. What is the total effect of the errors on the balance of Langley's retained earnings at December 31, 2024?

81. Langley Company's December 31 year-end financial statements contained the following errors: Ending inventory Depreciation expense Dec. 31, 2023 $37,500 understated 10,000 understated Dec. 31, 2024 $55,000 overstated An insurance premium of $90,000 was prepaid in 2023, covering the years 2023, 2024, and 2025. The prepayment was recorded with a debit to insurance expense. In addition, on December 31, 2024, fully depreciated machinery was sold for $47,500 cash, but the sale was not recorded until 2025. There were no other errors during 2024 or 2025, and no corrections have been made for any of the errors. Ignore income tax considerations. What is the total effect of the errors on the balance of Langley's retained earnings at December 31, 2024?

Name: Rr.22. 81. Langley Company's December 31 year-end financial statements
Uploaded: 2024-03-20T06:32:37.000Z
Channel: Bartleby
Description: Rr.22. 81. Langley Company's December 31 year-end financial statements contained the followingerrors:Ending inventoryDepreciation expenseDec. 31, 2023$37,500 understated10,000 understatedDec. 31, 2024$55,000 overstatedAn insurance premium of $90,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

(Error Analysis) Peter Henning Tool Company's December 31 year-end financial statements contained the following errors. December 31, 2020 December 31, 2021 Ending inventory $9,600 understated $8,100 overstated Depreciation expense $2,300 understated — An insurance premium of $66,000 was prepaid in 2020 covering the years 2020, 2021, and 2022. The entire amount was charged to expense in 2020. In addition, on December 31, 2021, fully depreciated machinery was sold for $15,000 cash, but the entry was not recorded until 2022. There were no other errors during 2020 or 2021, and no corrections have been made for any of the errors. (Ignore income tax considerations.) Instructions a. Compute the total effect of the errors on 2021 net income. b. Compute the total effect of the errors on the amount of Henning's working capital at December 31, 2021. c. Compute the total effect of the errors on the balance of Henning's retained earnings at…
On November 1, 2025, Marin Inc. had the following account balances. The company uses the perpetual inventory method. Cash Accounts Receivable Supplies Equipment 22 25 27 28 29 29 10 29 11 12 During November, the following summary transactions were completed. 15 Debit 19 $27,000 20 6,720 2,580 75,000 $111,300 Accumulated Depreciation-Equipment Accounts Payable Unearned Service Revenue Salaries and Wages Payable Common Stock Nov. 8 Paid $10,650 for salaries due employees, of which $5,550 is for November and $5,100 is for October. Received $5,700 cash from customers in payment of account. Purchased merchandise on account from Dimas Discount Supply for $24,000, terms 2/10, n/30. Sold merchandise on account for $16,500, terms 2/10, n/30. The cost of the merchandise sold was $12,000. Received credit from Dimas Discount Supply for merchandise returned $900. Received collections in full, less discounts, from customers billed on sales of $16,500 on November 12. Paid Dimas Discount Supply in…
On January 1, 2021, the general ledger of Tripley Company included the following sccount balances: Accounts Debit Credit $250, 0e 78,0ee Cash Accounts receivable Allowance for uncollectible accounts Inventory Building Accunulated depreciation Land $ 35,800 33,000 223,0ee 48, e00 248,6e0 Accounts payable Notes payable (8x, due in 3 years) 170, e00 216,e00 113,600 242, e00 Conmon stock Retained earnings Totals $816,680 $816, 600 The $33,000 beginning balance of inventory consists of 330 units, esch costing $100. During January 2021, the company had the following transsctions: January 2 Lent $58,000 to an employee by accepting a 6% note due in six Tonths. 5 Purchased 5,000 units of inventory on account for $550,eee ($110 cach) with terms 1/1e, n/30. 8 Returned 100 defective units of inventory purchased on January 5. 15 Sold 4,8ae units of inventory on account for $768,000 ($16e cach) with terms 2/10, n/30. 17 Customers returned 20e units sold on January 15. These units were initially…
Company presents the following selected general ledger accountsshowing balances at October 1, 2017: CashFinished GoodsWork in ProcessRaw materialsPrepaid Insurance Accumulated Depreciation Accounts PayableBalances at October 31, 2017 include: Accrued payrollFinished goodsWork in ProcessRaw MaterialsP 40,000 592,000 164,000 128,0004,000 280,000 108,000P 12,000 608,000 188,000 120,000 A summary of transactions for the month of October follows: a. Cash salesb. Raw materials purchased on account c. Direct materials usedd. Direct Labore. Factory insurance expiredf. Depreciation for factory equipment g. Factory utility service on accounth. Accounts payable paidi. Factory payroll paidP420,000 168,000 156,00064,000 1,200 6,80012,000 196,000 88,000Required: Indirect materials used.Indirect laborTotal factory overhead Cost of goods manufa
The following information is from the accounts of Neway Ltd for the years 2018 and 2019 Neway Ltd Summary of the statement of comprehensive income 2019 2018 $m $m Sales revenue 650 615 COGS 305 295 Gross profit Interest expense Other expenses (including depreciation) Profit 320 (13) (100) 345 (15) (120) 210 207 63 Depreciation expense Accounts payable at the end of the period Accounts receivable at the end of the period |Inventory held at the end of the period 85 30 25 34 46 65 57 Required: a) Prepare a statement of cash flows from operations for Neway Ltd. b) Prepare a statement that reconciles the profit with the cash flows from operations.
On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances:Accounts Debit CreditCash $ 11,200Accounts Receivable 34,000Allowance for Uncollectible Accounts $ 1,800Inventory 152,000Land 67,300Buildings 120,000Accumulated Depreciation 9,600Accounts Payable 17,700Common Stock 200,000Retained Earnings 155,400Totals $384,500 $384,500During January 2021, the…
XYZ Company's adjusted balances for last year are as follows: Inventory, January 1, 200.. .149,000 Inventory, December 31, 2020. ..120,000 Sales . Purchases . .$1,200,000 Accounts payable... . ..71,000 .810,000 Salaries Payable. .5,000 Marketable securities.. .15,000 Cash surrender value of life insurance. .2,000 Purchase discounts.. 20,000 Patents.. .18,000 Purchasereturns and allowances. .2,000 Retained earnings, January 1, 2019... .60,600 Extraordinary loss dueto earthquake, net of Applicable taxes.. .35,000 Interest expense. 13,000 Selling expenses. 114,000 General and administrative expense. Cash. .90,000 Divi dend revenue... .6,000 Accounts receivable. .60,000 Allowance for doubtful accounts . .3,000 Common stock.. . Notes Payable (Maturity date 7/1/2021) . 105,000 150.000 Machinery and Equipment. 150,000 Accumulated deprediation. .42,000 Income tax expense. .30,600 Paid-in-capital in excess of par.. .30,000 U L ... Treasury stock.. .10,000 Divi dends dedared and paid.. ..18,000…
Teal Tool Company's December 31 year-end financial statements contained the following errors. Ending inventory Depreciation expense December 31, 2020 $10,500 understated $2,400 understated Total effect of errors on net income $ An insurance premium of $69,000 was prepaid in 2020 covering the years 2020, 2021, and 2022. The entire amount was charged to expense in 2020. In addition, on December 31, 2021, fully depreciated machinery was sold for $16,000 cash, but the entry was not recorded until 2022. There were no other errors during 2020 or 2021, and no corrections have been made for any of the errors. (Ignore income tax considerations.) (a) Compute the total effect of the errors on 2021 net income. Total effect on working capital $ December 31, 2021 understated overstated (b) Compute the total effect of the errors on the amount of Teal's working capital at December 31, 2021. $8,200 overstated Total effect on retained earnings (c) Compute the total effect of the errors on the balance of…
On June 30, 2021, Streeter Company reported the following account balances: Receivables Inventory Buildings (net) Equipment (net) Total assets $ 88,200 Current liabilities 75,250 Long-term liabilities 87,500 Common stock 29,400 Retained earnings $ 280,350 Total liabilities and equities $ (16,100) (74,250) (90,000) (100,000) $ (280,350) On June 30, 2021, Princeton Company paid $315,200 cash for all assets and liabilities of Streeter, which will cease to exist as a separate entity. In connection with the acquisition, Princeton paid $19,900 in legal fees. Princeton also agreed to pay $66,400 to the former owners of Streeter contingent on meeting certain revenue goals during 2022. Princeton estimated the present value of its probability adjusted expected payment for the contingency at $23,700. In determining its offer, Princeton noted the following pertaining to Streeter: • It holds a building with a fair value $44,900 more than its book value. • It has developed a customer list appraised…
The following selected accounts and the current balances apper in the ledger of Anderson Co., for the fiscal year ended May 31, 2020. Advertising Expense $550Cost of Merchandise Sold 7850Customer Refunds Payable 40Delivery Expense 16Depreciation Expense-Office Equipment 50Depreciation Expense-Store Equipment 140Estimated Returns Inventory 22Insurance Expense 48Interest Expense…
Prepare the income statements and balance sheets for years 2018 and 2019 for Thompson Company using the following information. The balance sheet numbers are at the end of year figures.Item20182019Accounts Payable120.0150.0Accounts Receivable150.0180.0Accumulated Depreciation330.0360.0Cash & Cash Equivalents10.012.0Common Stock150.0200.0Cost of Goods Sold750.0850.0Depreciation25.030.0Interest Expense30.033.0Inventory200.0180.0Long-term Debt150.0150.0Gross Plant & Equipment650.0780.0Retained Earnings208.5225.0Sales1,500.01,700.0SG&A Expenses500.0570.0Notes Payable51.567.0Tax Rate21%21%(2) Answer the following questions:(a) How much did Thompson Company spend in acquiring fixed assets in 2019?(b) How much dividend did Thompson Company pay out during 2019?(c) Using the end of year numbers, did the long-term solvency ratios improve or deteriorate from 2018 to 2019? Answer this question using at least two long-term solvency ratios.(d) Using the end of year numbers, did the asset…
Crane Company's balance sheet at December 31, 2021, is presented below. Cash Inventory Prepaid Insurance Equipment 1. 2. 3. 4. 5. 6. 7. CRANE COMPANY Balance Sheet December 31, 202 $24,000 Accounts Payable Interest Payable Notes Payable Owner's Capital 24,600 Adjustment data: 4,800 During January 2022, the following transactions occurred. (Crane Company uses the perpetual inventory system.) 30,400 $83,800 $11,000 200 40,000 32,600 $83,800 Crane paid $200 interest on the note payable on January 1, 2022. The note is due December 31, 2023. Crane purchased $208,880 of inventory on account. Crane sold for $352,000 cash, inventory which cost $212,000. Crane also collected $22,880 in sales taxes. Crane paid $184,000 in accounts payable. Crane paid $13,600 in sales taxes to the state. Paid other operating expenses of $24,000. On January 31, 2022, the payroll for the month consists of salaries and wages of $48,000. All salaries and wages are subject to 7.65% FICA taxes. A total of $7,120…