1. Prince Corporation failed to recognize accruals and prepayments since the inception of its business three years ago.

The accruals and prepayments at the end of 2010 are given below: Prepaid Insurance P60,000 Accrued Wages 75,000 Rent revenue collected in advance 96,000 Interest Receivable 81,000 What is the net effect of the above errors in the 2010 net income? 2. While examining the December 31,2010 financial statements of Raven Company, you discover the following: A) Inventory at January 1,2010 had been overstated by P30,000. B) Inventory at December 31,2010 was understated by P50,000. C) During 2010, Raven received a P100,000 cash advance from a customer for merchandise to be manufactured and shipped during 2011. The amount was credited to sales revenue. D) The net income reported on the 2010 income statement before reflecting any adjustments for the above items is P3,000,000. What is the corrected net income for the year ended December 31,2010? 3. Genesis Company has determined its 2008 and 2009 net income figures to be P1,150,000 and P1,100,000 respectively. In a first time audit of the companys financial statements, you determine the following errors: A) Merchandise inventory was incorrectly determined: P50,000 overstatement for 2008 and P150,000 overstatement for 2009. B) Revenue received in advance in 2008 of which P250,000 was credited to a revenue account when received. Of the total, P50,000 was earned in 2008, P120,000 was earned in 2009 and the remainder will be earned in 2010. C) P120,000 gain on sale of plant assets in 2009 was erroneously credited to Accumulated Profits and Losses. What is the corrected net income for the year 2009? 4. On December 30,2008 Raizen Corporation sold merchandise for P75,000 to Zairus Company. The terms of the sale were n/30, FOB shipping point. The merchandise was shipped on December 31,2008, and arrived at Zairus on January 2, 2009. Due to a clerical error, the sale was not recorded until January 2009 and the merchadise, sold at a 25% markup on cost, was included in Raizens inventory at December 31,2008. As a result, Raizens cost of goods sold for the year ended December 31,2008 was 5. Love Company started operations on January 1, 2008. Financial statements for 2008 and 2009 contained the following errors: December 31,2008 December 31,2009 Ending inventory P55,000 too high P65,000 too low Depreciation expense 35,000 too high Insurance Expense 25,000 too low 25,000 too high Prepaid Insurance 25,000 too high Additionally, a fully depreciated equipment was sold for P12,000 on December 31,2009. The sale was not recorded until 2010. No corrections have been made for any of the errors.(Ignore income tax considerations.) How much would be the total effect of the errors in Loves 2009 net income? 6. HBW Company failed to recognize accruals and prepayments since the inception of its business three years ago. The earnings before tax, accrual and prepayments at the end of the current year are: Earnings before tax 1,400,000 Prepaid Insurance 20,000 Accrued Wages 25,000 Rent Revenue collected in advance 30,000 Interest Receivable 50,000 The corrected earnings before tax should be?

7. While examining the December 31, 2009 financial statements of EDS Company, the following errors are discovered: A) Inventory at January 1 had been overstated by P50,000. B) Inventory at December 31 was understated by P100,000.

C) During 2009, EDS received a P200,000 cash advance from customer for merchandise to be manufactured and shipped during 2010. The amount was credited to sales revenue. D) The net income reported on the 2009 income statement before reflecting any adjustment for the above items is P5,000,000. What is the corrected net income for the year ended December 31,2009? 8. Coca-Cola Company has determined its 2008 and 2009 net income figures to be P4,000,000 and P5,000,000 respectively. In a first time audit of the financial statement, the following errors are discovered: A) Merchadise inventory was incorrectly determined- P50,000 overstatement for 2008 and P150,000 overstatement for 2009. B) Revenue received in advance in 2008 of P300,000 was credited to a revenue account when received. Of the total, P50,000 was earned in 2008, P200,000 was earned in 2009 and the remainder will be earned in 2010. C) P400,000 gain on sale of plant asset in 2009 was erroneously credited to retained earnings. What is the corrected net income for 2009?

9. Biden Corp. reports on a calendar-year basis. Its 2009 and 2010 financial statements contained the following errors: 2009 2010 Over(under)statement of ending $(10,000) $ 4,000 inventory .... Depreciation understatement ................. 4,000 6,000 Failure to accrue salaries at year 8,000 12,000 end ...... As a result of the above errors, 2005 income would be 10. Barker, Inc. receives subscription payments for annual (one year) subscriptions to its
magazine. Payments are recorded as revenue when received. Amounts received but unearned at the end of each of the last three years are shown below:

2008 2009 2010 Unearned revenues $120,000 $150,000 $176,000 Barker failed to record the unearned revenues in each of the three years. As a result of the omission, 2010 income was 11. Eddie Masuyo & Co. failed to recognize accruals and prepayments since the commencement of its operations three years ago. The earnings before tax, accruals, and prepayments at the end of the current year are: Earnings before tax P1, 400, 000 Prepaid Insurance 20, 000 Accrued Wages 20, 000 Rent revenue collected in advance 32, 000 Interest Receivable 67, 000 What should be the corrected earnings before tax? 12. The December 31 year-ended financial statement of Abeto Company contained the following errors:
Ending Inventory Depreciation expense Dec.31, 2006 P48,000 understated P11,500 understated Dec. 31, 2007 P40,500 overstated --------------------------

An insurance premium of P330,000 was prepaid in 2006 covering the tears 2006, 2007, and 2008. The entire amount was charged to expense in 2006. In addition, on December 31, 2007, a fully depreciated machinery was sold for P75,000 cash, but the sale was not recorded until 2008. There were no other errors during 2006 and 2007, and no correction have been made for any errors. Ignore income tax effects. 1. What is the total effect of the errors on Abetos 2007 Net income? 2. What is the total effect of the errors on the amount of Abetos working capital at December 31, 2007? 3. What is the total effect of the errors on the balance of Abetos retained earnings at December 31, 2007?