How much is retained earnings over or understatement

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Reference no: EM132943750

ABC Company recorded a net income, after the 30% income tax, of Php105,000 in 2020. The entity paid Php24,000 for a 2-year insurance coverage and has failed to prepare the necessary' journal entries during the year The correct prepaid insurance as of December 31,2021 is Php3,000

Problem 1: If the error has remained undiscovered, how much is retained earnings over or understatement as of December 31, 2021?

Option 1: 2,700 understated

Option 2: 3,000 understated

Option 3: 12,000 understated

Option 4: 9,000 overstated

Option 5: None of the choices

Problem 2: How much is the adjusted net income after tax in 2020?

Option 1: 98,700.00

Option 2: 96,000.00

Option 3: 143,700.00

Option 4: 107,700.00

Option 5: None of the choices

Reference no: EM132943750

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