Upon inspection of the records of Emerald Company, the following facts were
discovered for the year ended December 31, 2019.
A fire insurance premium of P40,000 was paid an charged as insurance expense for
The fire insurance policy covers one year from April 1, 2019.
Inventory on January 1, 2019 was understated by P80,000.
Inventory on December 31, 2019 was understated by P120,000.
Taxes of P60,000 for the fourth quarter of 2019 were paid on January 20, 2020 and
charged as expense of 2020.
On December 5, 2019 a cash advance of P100,000 by a customer was received for
goods to be delivered in January, 2020.
The amount of P100,000 was credited to sales. The gross profit on sales is 40%.
The net income for the year ended December 31, 2019 before any adjustments is
Determine the correct net income for 2019
Prepare adjusting entries on December 31, 2019.