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Correction of Errors Part 1

The document describes errors discovered in the 2017 and 2018 financial statements of BTS Company. It provides information on the original reported net income for 2017 and 2018, as well as details on errors made in 2017 regarding the incorrect accounting of land, notes receivable, notes payable, and investment property. The requirements are to compute the adjusted net income and retained earnings for 2017 and 2018, and prepare adjusting entries for the errors for the years 2017, 2018, and 2019.

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98 views

Correction of Errors Part 1

The document describes errors discovered in the 2017 and 2018 financial statements of BTS Company. It provides information on the original reported net income for 2017 and 2018, as well as details on errors made in 2017 regarding the incorrect accounting of land, notes receivable, notes payable, and investment property. The requirements are to compute the adjusted net income and retained earnings for 2017 and 2018, and prepare adjusting entries for the errors for the years 2017, 2018, and 2019.

Uploaded by

Avox Everdeen
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CORRECTION OF ERRORS

Problem 1

Land of ₱1,000,000 was erroneously debit to notes receivable.

Problem 2

BTS Company reported net income for the first two years of operation as follows:

2017: ₱5,000,000

2018: ₱6,000,000

In audit of the financial statement for the year ended December 31, 2018 the following errors
are discovered (all errors were made in 2017):

1. Notes receivable of ₱10,000 was erroneously debited to accounts receivable

2. Notes Payable of ₱15,000 was erroneously credited to accounts payable.

3. Land of ₱100,000 was erroneously debited to investment property accounts.

Requirement:

1. Compute for the adjusted net income in 2017 and 2018 and Retained earnings as of
the years ended December 31, 2017 and 2018.

2. Prepare adjusting entries assuming errors were discovered in


a. 2017
b. 2018
c. 2019

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