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You have recently been hired by ABC, Inc. to review its financial statements prepared for the years ending December 31, 2009 and 2010. Your review...

2 ACCOUNTING PROBLEMS...
1. You have recently been hired by ABC, Inc. to review its financial statements prepared for the years ending December 31, 2009 and 2010. Your review reveals several errors. Required: Determine the effect of each error on the 2009 financial statements, and, if not corrected, the 2010 financial statements. Use O for overstated; U for understated, and NE for not effected. If there is an effect, state the dollar amount. (DO NOT SPACE BETWEEN THE LETTER AND DOLLAR AMOUNT; DON'T USE COMMA'S. Example: IF YOUR ANSWER IS "OVERSTATED BY 1,000", ENTER YOUR ANSWER AS O1000, “UNDERSTATED BY 1,000”, ENTER YOUR ANSWER AS U1000) a. A three-year insurance policy was purchased for $7,200 on March 31, 2009 and the full amount was debited to a nominal account. No adjusting entry had ever been made. December 31: Assets 2009: Liabilities 2009: Net Income 2009: Owner's Equity 2009: Assets 2010: Liabilities 2010: Net Income 2010: Owner's Equity 2010: b. A one-year note payable of $12,000 was given by ABC to a supplier in exchange for equipment on May 1, 2009. The note has an annual interest rate of 9%. No interest was accrued on the note during 2009. All interest was recorded at maturity on May 1, 2010. December 31: Assets 2009: Liabilities 2009: Net Income 2009: Owners' Equity 2009: Assets 2010: Liabilities 2010: Net Income 2010: Owners' Equity 2010: 2. ABC Company uses cash-basis accounting for its records. During 2010, ABC collected $650,000 from its customers, made payments of $260,000 to its suppliers for inventory, and paid $182,000 for operating costs. ABC wants to prepare accrual-basis financial statements. In gathering information for the accrual-basis financial statements, ABC discovered the following: · Customers owed ABC $65,000 at the beginning of 2010 and $45,500 at the end of 2010. · ABC owed suppliers $26,000 at the beginning of 2010 and $35,100 at the end of 2010. · ABC's beginning inventory was $57,200, and its ending inventory was $54,600. · ABC had prepaid expenses of $6,500 at the beginning of 2010 and $9,000 at the end of 2010. · ABC had accrued expenses of $15,000 at the beginning of 2010 and $24,000 at the end of 2010. · Depreciation for 2010 was $66,300. Question a. Accrual-basis revenue for 2010 for ABC Company is? b. Accrual-basis COGS for 2010 for ABC Company is? c. Accrual-basis total income for 2010 for ABC Company is?
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1. You have recently been hired by ABC, Inc. to review its financial statements prepared for the years ending
December 31, 2009 and 2010. Your review reveals several errors.
Required: Determine the...

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