Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 16, Problem 4P
1.
To determine
Prepare
2.
To determine
Compute the corrected shareholder’s equity section of Company H’s December 31, 2019, balance sheet and also provide necessary notes to its financial statements.
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In line with your audit with DAVE, Inc. financial statements, the company accountantpresented to you the balance sheet that follows. You reviewed the client’s accountingrecords and books based thereon. You discovered that books of accounts are inagreement in the said balance sheet as presented below:
DAVE, INC.STATEMENT OF FINANCIAL POSITIONDecember 31, 2021
ASSETS LIABILITIES AND OWNERS EQUITYCash P 80,000 Accounts Payable P 32,000Accounts Receivable 160,000 Notes Payable 64,000Notes Receivable 48,000 Capital Stock 160,000Inventories 400,000 Retained Earnings 432,000Total P 688,000 Total P 688,000
Further review and investigation of the company’s books revealed the followingomissions and errors which were not corrected during the year of errors:
2018 2019…
Jones was engaged to examine the financial statements of Gamma Corporation for the year ended June 30. Having completed an examination of the investment securities, which of the following is the best method of verifying the accuracy of recorded dividend income?a. Tracing recorded dividend income to cash receipts records and validated deposit slips.b. Performing analytical procedures and statistical sampling.c. Comparing recorded dividends with amounts appearing on federal information Form 1099.d. Comparing recorded dividends with a standard financial reporting service’s record of dividends.
You’ve been hired to perform an audit of Hubbard Company for the year ended December 31, 2019. You find the following account balances related to shareholders’ equity:
Preferred stock, $100 par
$ 33,000
Common stock, $10 par
68,000
Capital surplus
(15,100)
Retained earnings
172,000
Because of the antiquated terminology and negative balance, you examine the Capital Surplus account and find the following entries:
Credit (Debit)
Additional paid-in capital on common stock
$ 27,700
Capital from donated land
16,900
Treasury stock (400 common shares at cost)
(5,600)
Additional paid-in capital on preferred stock
2,000
Stock dividend (50%)
(20,000)
Prior period adjustment (net of income taxes)
(10,100)
Loss from fire (uninsured), 2018
(18,100)
Property dividend declared
(5,600)
Cash dividends declared
(23,300)
Balance
$ (36,100)
Your examination of the Preferred Stock and Common Stock accounts reveals that the amounts shown correctly state the…
Chapter 16 Solutions
Intermediate Accounting: Reporting And Analysis
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