fav3chp10-12 - 112 CHAPTER10 Problem101 1.C 2.B 3.B 4.A 5.A...

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          112 CHAPTER  10 Problem 10-1 Problem 10-2 1.  C    6.  B 1.  C 2.  B    7.  C 2.  B 3.  B    8.  C 3.  C 4.  A    9.  D 4.  D 5.  A  10.  A 5.  A Problem 10-3  2007  2008 Net income 1,500,000 1,600,000 Overstatement of inventory: 2007        (   130,000)    130,000 2008    (   110,000) Understatement of accrued advertising: 2007    (   60,000) 60,000 2008    ( 30,000) Understatement of accrued interest income: 2007 40,000    ( 40,000) 2008 60,000 Omission of depreciation: 2007        ( 80,000)     2008 _________    (   100,000) Corrected net income 1,270,000 1,570,000 Adjusting entries – Books not closed 1. Retained earnings    130,000   Inventory – January 1, 2008    130,000     Income summary    110,000   Inventory – December 31, 2008    110,000
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2. Retained earnings 60,000   Advertising 60,000     Advertising 30,000   Accrued expenses 30,000   113 3. Interest income 40,000   Retained earnings 40,000     Accrued interest receivable 60,000   Interest income 60,000 4. Retained earnings 80,000     Depreciation    100,000   Accumulated depreciation    180,000 Adjusting entries – Books closed 1. Retained earnings    110,000   Inventory – December 31, 2008    110,000 2. Retained earnings 30,000   Accrued expenses  30,000 3. Accrued interest receivable 60,000   Retained earnings  60,000 4. Retained earnings    180,000   Accumulated depreciation     180,000 Problem 10-4 2007 2008 Net income  1,750,000  2,000,000
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Salary accrued omitted: 2007    (   100,000)     100,000 2008     (   140,000) Inventory – December 31, 2007 overstated    (   190,000)     190,000 Prepaid insurance unrecorded on December 31, 2008        120,000 Interest receivable unrecorded on December 31, 2008       20,000 Other income overstated     (   160,000) Depreciation overstated _________           40,000     Corrected net income 1,460,000  2,170,000 Adjusting entries – December 31, 2008 – Book open 1. Retained earnings    100,000   Salaries     100,000    114     Salaries    140,000   Accrued salaries payable    140,000 2. Retained earnings    190,000   Inventory – January 1, 2007    190,000 3. Prepaid insurance    120,000   Insurance    120,000 4. Accrued interest receivable 20,000   Interest income 20,000 5. Miscellaneous income    220,000     Accumulated depreciation    240,000    Equipment    400,000    Gain on sale of equipment 60,000     Accumulated depreciation 40,000    Depreciation 40,000
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Adjusting entries – December 31, 2008 – Books closed 1. Retained earnings    140,000    Accrued salaries payable    140,000 2. No adjustment 3. Prepaid insurance    120,000    Retained earnings    120,000 4. Accrued interest receivable 20,000    Retained earnings 20,000 5. Retained earnings    160,000     Accumulated depreciation    240,000    Equipment    400,000     Accumulated depreciation 40,000    Retained earnings 40,000     115 Problem 10-5     2007 2008 Net income  3,000,000 4,000,000 December 31, 2007 inventory understated 20,000    ( 20,000) December 31, 2008 inventory overstated    ( 18,000) Depreciation for 2007 understated    (   4,000)              -
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fav3chp10-12 - 112 CHAPTER10 Problem101 1.C 2.B 3.B 4.A 5.A...

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