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+--- Thread: Fixing the profit after realizing errors (/thread-fixing-the-profit-after-realizing-errors)
Fixing the profit after realizing errors - danjgud - 12-16-2010
Hi,
The problem is like this. There are errors in both years which means the account is either over or understated.
2009
Inventory 120.000 overstated
Depreciation68.000 understated
Accumulated depreciation 68.000 understated
Insurance cost 22.000 overstated
Prepaid insurance76.000 understated
2010
Inventory 134.000 overstated
Depreciation0
Accumulated depreciation 68.000 understated
Insurance cost 22.000 understated
Prepaid insurance0
The recorded profit of 2010 before realizing these errors was 100.000. What is the profit in 2010 after realizing these errors?
- zahid 13456 - 12-16-2010
AOA!
I think solution of this problem should be
PROFIT 10 (before adjustments) RS 100,000
09 Inventory overstated 120,000
C/B 2010 Inventory o/s (134,000)
Insurance cost u/s (22,000)
PROFIT 2010 (after adjustments) 64,000
All other elements will not have any effect on profit.
(My accounting concepts are not much pertinent so, error is expected)
Regards.