Question
In: Accounting
Straightarm Inc. is a calendar-year corporation. Its financialstatements for the years ended 12/31/24 and 12/31/25...
Straightarm Inc. is a calendar-year corporation. Its financial statements for the years ended 12/31/24 and 12/31/25 contained the following errors:
2024 | 2025 | |
Ending inventory | $15,000 understatement | $24,000 overstatement |
Depreciation expense | $6,000 understatement | $12,000 understatement |
Failed to record Unearned Revenue at 12/31/25: $7,000
Straightarm declared a cash dividend of $11,000 on 12/31/25. No journal entry was made in 2025. The dividend was paid on 1/3/26; Straightarm debited Retained Earnings and credited Cash.
12/31/25 Liabilities are in error by:
Select one:
a. $7,000
b. $18,000
c. $11,000
d. $4,000
Solutions
Expert Solution
Liabilities+ equity = assets
2024
Ending inventory understatement 15000
Implies opening inventory of 2025 under stated
Profit over stated
(equity) over stated in 2025. 15000
No effect on liability
Depreciation understatement 6000
Expenses understatement
Profit overstatement
overstated equity 6000
2025
Ending inventory overstatement
Profit understated
equity understatement 24000
Depreciation 12000 understated
Expenses understatement
Profit over overstated
Equity over stated. 12000
Entry for unearned revenue
Revenue a/c Dr 7000
To unearned revenue 7000
Implies revenue over stated
And liability understated
Dividend declared
Dividend a/c Dr 11000
To dividend payable a/c 11000
Understatement of expenses leads to overstatement of profit
Liability understated
Clearly liabilities are affected in last 2 cases only
18000(7000+11000) of liabilities are understated.
ekkarill92 answered 2 years agoRelated Solutions
Straightarm Inc. is a calendar-year corporation. Its financial statements for the years ended 12/31/24 and 12/31/25...
Straightarm Inc. is a calendar-year corporation. Its financial
statements for the years ended 12/31/24 and 12/31/25 contained the
following errors:
2024
2025
Ending inventory
$15,000 understatement
$24,000 overstatement
Depreciation expense
$6,000 understatement
$12,000 understatement
Failed to record Unearned Revenue at 12/31/25: $7,000
Straigtharm declared a cash dividend of $11,000 on 12/31/25. No
journal entry was made in 2025. The dividend was paid on 1/3/26;
Straightarm debited Retained Earnings and credited Cash.
12/31/26 Total Stockholders’ Equity is in error by:
Select...
Hudson, Inc. is a calendar-year corporation. Its financial statements for the years 2015 and 2014 contained...
Hudson, Inc. is a calendar-year corporation. Its financial
statements for the years 2015 and 2014 contained errors as
follows:
2015
2014 Ending
inventory
$6,000
overstated
$16,000 overstated
Depreciation
expense
$4,000
understated
$12,000 overstated
Assume that no correcting entries were
made at December 31, 2014. Ignoring income taxes, by how
much will retained earnings at December 31, 2015 be overstated or
understated?
Ancelotti, Inc. is a calendar-year corporation. Its financial statements for the years 2011 and 2010 contained...
Ancelotti, Inc. is a calendar-year corporation. Its financial
statements for the years 2011 and 2010 contained errors as
follows:
1) Ending Inventory for 2011 is overstated by $3,000
2) Ending Inventory for 2010 is overstated by $8,000
3) Salaries expense for 2011 is understated by $2,000
4) Salaries expense for 2010 is overstated by $6,000
No correcting entries were made at December 31, 2010. Assuming no
taxes, by how much will retained earnings at December 31, 2011 be
overstated or...
Exercise 24-1 (Essay) Madrasah Corporation issued its financial statements for the year ended December 31, 2017,...
Exercise 24-1 (Essay) Madrasah Corporation issued its financial
statements for the year ended December 31, 2017, on March 10, 2018.
The following events took place early in 2018. (a) On January 10,
10,000 shares of $5 par value common stock were issued at $66 per
share. (b) On March 1, Madrasah determined after negotiations with
the Internal Revenue Service that income taxes payable for 2017
should be $1,270,000. At December 31, 2017, income taxes payable
were recorded at $1,100,000.
Discuss...
Go-Go & Co. is preparing its financial statements for the year ended 12/31/2015. As of 12/31,...
Go-Go & Co. is preparing its financial statements for the
year ended 12/31/2015. As of 12/31, the company’s current assets
are less than its current liabilities. The company is evaluating
whether it must comply with the Codification’s going concern
disclosure requirements, established in ASU 2014-15. Locate the
Codification topic that addresses this issue. Explain whether
disclosure of going concern issues is currently required for Go-Go
& Co, considering the transition guidance provided for this
topic. Next, explain whether such disclosure...
The Bennett Corporation provides you with the following information for the year ended 12/31/20: ...
The Bennett Corporation provides you with the following
information for the year ended 12/31/20:
Sales revenue
450,000
Cost of goods sold
120,000
Gross margin
330,000
Depreciation expense
72,750
...
The Jasper Corporation provides you with the following information for the year ended 12/31/17: &n
The Jasper Corporation provides you with the following
information for the year ended 12/31/17:
Income
Statement Information:
Sales
Revenue
$300,000
Cost of goods
sold
80,000
Gross
margin
220,000
Depreciation
expense
47,000
Uncollectible accounts
expense
1,500
Pension
expense
19,000
Other
expense
25,500
interest
expense
3,000
gain
on the sale of
equipment (2,000)
income
tax
expense
65,000 159,000
Net
income $61,000
Balance Sheet Information:
12/31/16
12/31/17
Cash
$16,000
$36,000
Accounts
Receiveable
56,000
52,000
Allowance for Doubtful
Accounts
(6,000) ...
The Jasper Corporation provides you with the following information for the year ended 12/31/17: &n
The Jasper Corporation provides you with the following
information for the year ended 12/31/17:
Income
Statement Information:
Sales
Revenue
$300,000
Cost of goods
sold
80,000
Gross
margin
220,000
Depreciation
expense
47,000
Uncollectible accounts
expense
1,500
Pension
expense
19,000
Other
expense
25,500
interest
expense
3,000
gain
on the sale of
equipment (2,000)
income
tax
expense
65,000 159,000
Net
income $61,000
Balance Sheet Information:
12/31/16
12/31/17
Cash
$16,000
$36,000
Accounts
Receiveable
56,000
52,000
Allowance for Doubtful
Accounts
(6,000) ...
The Jasper Corporation provides you with the following information for the year ended 12/31/17: &n
The Jasper Corporation provides you with the following
information for the year ended 12/31/17:
Income
Statement Information:
Sales
revenue $ 300,000
Cost
of goods sold 80,000
Gross
margin 220,000
Depreciation
expense 47,000
Uncollectible
accounts expense 1,500
Pension
expense 19,000
Other
expense 25,500
Interest
expense 3,000
Gain
on the sale of equipment (2,000)
Income
tax expense 65,000 159,000
Net
Income $ 61,000
Balance
Sheet Information
12/31/16 12/31/17
Cash $
16,000 $ 36,000
Accounts
Receivable 56,000 52,000
Allowance
for Doubtful
Accounts (6,000) (5,000)
Inventory 83,000 84,000
Equipment 85,000 82,000
Accumulated
Depreciation (6,000) (7,000)
Total $228,000 $242,000
Accounts...
For the Antle, Inc. company, Total Current Assets was $ 228,000 for year ended 12//31//'95. Cash...
For the Antle, Inc. company, Total Current Assets was $ 228,000
for year ended 12//31//'95. Cash had a balance of $ 37,000 and A//R
had a balance of $ 86,000. Merchandise Inventory was the only other
Short-Term Asset. Land had a year-end balance of $ 148,000, while
Buildings had a balance of $ 316,000. Land and Buildings are the
only Fixed Assets, and Total Assets had a balance of $ 538,000 at
year end. Short-Term Notes Payable had a 12//31//'95...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella Co.,...
- Parallel Arrays This question is in MindTap Cengage Summary In this lab, you use what you...
- 5. You have invested 30 percent of your portfolio in Jacob, Inc., 40 percent is Bella...
- JAVA Write a test program that prompts the user to enter a series of integers and...
- (2) Cite an example on how organizations like Google, Facebook, Youtube etc collect data for image...
- The legal landscape is perpetually changing. Psychologists must remain abreast of these changes to avoid potentially...
- We are evaluating a project that costs $1.68 million, has a six-year life, and has no...
ADVERTISEMENT