BETA Company began operations in January 2021. Financial statements for the years ended December 31, 2021 and 2022 contained the following errors: • Ending inventory, 2021 - P16,000 understated • Ending inventory, 2022 - P15,000 overstated • Depreciation expense, 2021 - P6,000 understated • Insurance expense, 2021 - P10,000 overstated • Insurance expense, 2022 - P10,000 understated • Prepaid insurance, 2021 - P10,000 understated • In addition, on December 31, 2022, a fully depreciated machinery was sold for P10,800 cash, but the sale was not recorded until 2023. There were no other errors during 2021 and 2022 and no correction have been made for any of the errors.

BETA Company began operations in January 2021. Financial statements for the years ended December 31, 2021 and 2022 contained the following errors: • Ending inventory, 2021 - P16,000 understated • Ending inventory, 2022 - P15,000 overstated • Depreciation expense, 2021 - P6,000 understated • Insurance expense, 2021 - P10,000 overstated • Insurance expense, 2022 - P10,000 understated • Prepaid insurance, 2021 - P10,000 understated • In addition, on December 31, 2022, a fully depreciated machinery was sold for P10,800 cash, but the sale was not recorded until 2023. There were no other errors during 2021 and 2022 and no correction have been made for any of the errors.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 71BPSB

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