Bananas, Inc. is a calendar-year corporation. Its financial statements for the years ended December 31, 2019 and 2020 contained the following errors: Ending Inventory Depreciation expense 2019 $25,000 overstatement 10,000 understatement 2020 $40,000 understatement 20,000 overstatement Assume that no correcting entries were made in 2019 or 2020 and that no errors existed in 2018. Ignoring income taxes, by how much will retained earnings at December 31, 2020 be overstated or understated? Enter an overstatement as a positive number and an understatement as a negative number.
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- Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800Bonita, Inc. is a calendar-year corporation. Its financial statements for the years 2021 and 2020 contained errors as follows: Ending inventory Depreciation expense O $6000 overstated O $15750 understated O O $6000 understated 2021 $0 $10200 overstated $5550 understated 2020 Assume that no correcting entries were made at December 31, 2020, or December 31, 2021 and that no additional errors occurred in 2022. Ignoring income taxes, by how much will working capital at December 31, 2022 be overstated or understated? $23500 overstated $17500 overstatedessari, Ltd. is a calendar-year corporation. Its financial statements for the years 2020 and 2019 contained errors as follows: 2020 2019 Ending inventory $4,000 overstated $7,000 overstated Amortization expense $2,000 understated $8,000 overstated Assume that no correcting entries were made at December 31, 2019, or December 31, 2020 and that no additional errors occurred in 2020. Ignoring income taxes, by how much will working capital, at December 31, 2020 be overstated or understated? $0 $4,000 overstated $4,000 understated $3,000 understated Use the following information to answer the questions below.Shanti Inc. is a calendar-year corporation. Its financial statements for the…
- Hudson, Inc. is a calendar-year corporation. Its financial statements for the years 2018 and 2017 contained errors as follows: 2018 2017 Ending inventory $9,000 overstated $24,000 overstated Depreciation expense $6,000 understated $18,000 overstated Reference: Ref 8-5 Assume that no correcting entries were made at December 31, 2017, or December 31, 2018 and that no additional errors occurred in 2019. Ignoring income taxes, by how much will working capital at December 31, 2019 be overstated or understated? A. $0 B. $15,000 understated C. $ 6,000 overstated D. $ 6,000 understatedWildhorse, Inc. is a calendar-year corporation whose financial statements for 2020 and 2021 included errors as follows: Year Ending Inventory Depreciation Expense 2020 $414000 overstated $360000 overstated 2021 137000 understated 103500 understated Assume that purchases were recorded correctly and that no correcting entries were made at December 31, 2020, or at December 31, 2021. Ignoring income taxes, by how much should Wildhorse's retained earnings be retroactively adjusted at January 1, 2022? $87500 increase $33500 decrease $20500 increase $393500 increaseKoppernaes Inc. is a calendar-year corporation. Its financial statements for the years ended 12/31/17 and 12/31/18 contained the following errors: 2017 2018 Ending inventory $23,000 overstatement $52,000 understatement Depreciation expense 19,000 understatement 42,000 overstatement Assume that the 2017 errors were not corrected and that no errors occurred in 2016. By what amount will 2017 income before income taxes be overstated or understated?
- The Chalet Inc. is a calendar-year corporation. Its financial statements for the years ended 12/31/17 and 12/31/18 contained the following errors: 2017 2018 Ending inventory $11,000 understatement $14,000 overstatement Advertising expense 9,500 overstatement 11,500 understatement Assume that the 2017 errors were not corrected and that no errors occurred in 2016. By what amount will 2017 income before income taxes be overstated or understated?A corporation filed its Annual Income Tax Return for the taxable year 2018 on April 15, 2019 together with its required attachments such as the Audited Annual Financial Statements. On March 17, 2020, the company’s accountant discovered an error for excluding a sales amounting to Php7.5M which comprises a 30% under declaration of sales. What necessary action must be done by the company in relation to its discovery?A corporation filed its Annual Income Tax Return for the taxable year 2018 on April 15, 2019 together with its required attachments such as the Audited Annual Financial Statements. On March 17, 2020, the company’s accountant discovered an error for excluding a sales amounting to 7,500,000 which comprises a 30% under declaration of sales. a. What necessary action must be done by the company in relation to its discovery? b. Assume that the company was subjected to a BIR audit or was issued a Letter of Authority (LOA) prior to the amendment of its Annual Income Tax Return, is the company allowed to make any amendment? Justify your answer
- A corporation filed its Annual Income Tax Return for the taxable year 2018 on April 15, 2019 together with its required attachments such as the Audited Annual Financial Statements. On March 17, 2020, the company’s accountant discovered an error for excluding a sales amounting to Php7.5M which comprises a 30% under declaration of sales. 1. What necessary action must be done by the company in relation to its discovery? 2. Assume that the company was subjected to a BIR audit or was issued a Letter of Authority (LOA) prior to the amendment of its Annual Income Tax Return, is the company allowed to make any amendment?A company reports the following pretax income (loss) for both financial reporting purposes and tax purposes. Year Pretax Income (Loss) Tax Rate 2018 $183,000 17% 2019 69,000 17 2020 (206,800) 23 2021 385,100 23 Assuming that the company uses the carryforward provision, what is the amount of income or loss that will be reported for 2020? (Enter the amount only. DO NOT put a plus or minus sign in front of the amount.)Tempe Corporation is a calendar - year corporation. At the beginning of 2022, its election to be taxed as an S corporation became effective. Tempe Corporation's balance sheet at the end of 2021 reflected the following assets (it did not have any earnings and profits from its prior years as a C corporation): Asset Adjusted Basis FMV Cash $31,500 $ 31,500 Accounts receivable 46, 900 46,900 Inventory 206, 000 269,000 Land 196,000 143,000 Totals $ 480, 400 $ 490, 400 Tempe Corporation's business income for the year was $ 51,500 (this would have been its taxable income if it were a C corporation). During 2022, Tempe Corporation sold all of the inventory it owned at the beginning of the year for $ 302,000. a. What is its built - in gains tax in 2022 ? b. Assume the original facts, except that if Tempe Corporation were a C corporation, its taxable income would have been $ 8,800. What is its built - in gains tax in 2022?