Reference no: EM132799195
Questions -
Q1) Wirehair Company's statements for 2014 and 2015 included the following errors:
December 31, 2014 inventory understated 2,000,000
December 31, 2015 inventory overstated 1,000,000
Depreciation for 2014 understated 400,000
Depreciation for 2015 overstated 800,000
How much should retained earnings be retroactively adjusted on January 1, 2016?
A. 1,400,000 increase
B. 1,400,000 decrease
C. 600,000 increase
D. 600,000 decrease
Q2) On January 1, 2014, Birman Company purchased for P240,000 a machine with a useful life of 10 years and no salvage value. the machine was depreciated by the double-declining balance method and the carrying amount of the machine was P153,600 on December 31, 2015. Birman changed to the straight-line method on January 1, 2016. Birman can justify the change. What should be the depreciation expense on this machine for the year ended December 31, 2016?
A. 30,720
B. 24,000
C. 19,200
D. 15,360
Use the following information for the next three (3) questions: Silhouette Corporation reported profit for the year 2014 and 2015 at P550,000 and P700,000, respectively. Your audit of the company's account disclosed the need for adjustments as follows:
2014 2015
Overstatement of ending inventory due to error in pricing 29,000 33,000
Omission of depreciation on newly-acquired equipment 15,000 15,000
Understatement of commission receivable 22,000 18,000
A purchase of merchandise was not recorded until the following year, and also was not included in the ending inventory 60,000
Q3) The adjusted profit for 2015 was
A. 737,000
B. 710,000
C. 700,000
D. 677,000
Q4) What is the effect of the foregoing errors (overstatement) on total assets at December 31, 2015?
A. 66,000
B. 45,000
C. 36,000
D. 30,000
Q5) What is the effect on the foregoing errors on retained earnings at December 31, 2014?
A. 82,000 over
B. 67,000 over
C. 38,000 under
D. 22,000 over