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kipiarov [429]
3 years ago
14

Assume that no correcting entries were made at 12/31/14, or 12/31/15. Ignoring income taxes, by how much will retained earnings

at 12/31/15 be overstated or understated?
a. $40,000 overstatement
b. $35,000 overstatement
c. $50,000 understatement
d. $15,000 understatement
Business
1 answer:
joja [24]3 years ago
3 0

Use the following information for questions 55 and 56.

Armstrong Inc. is a calendar-year corporation. Its financial statements for the years ended 12/31/14 and 12/31/15 contained the following errors:

2014 2015

Ending inventory $25,000 overstatement $40,000 understatement

Depreciation expense 10,000 understatement 20,000 overstatement

<u>Answer:</u>

By $50,000 retained earnings at 12/31/15 is understated

Option c, $50,000 understatement

<u>Explanation:</u>

Given:

Ending inventory $25,000 overstatement $40,000 understatement

Depreciation expense 10,000 understatement 20,000 overstatement

To find:

The retained earnings amount to be overstated or understated at 12/31/15

When an amount is understated, it depicts the following two things,

  • The amount is not the correct amount
  • The amount is less than the true amount

Here, the reatianed earnings amount can be evaluated by the following step,

\$40,000 + \$10,000 = \$50,000 \text{ understatement }

So, it can be finalised that the retained earnings of $50,000 is understated.

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Thanks For Sharing.

on january 1, you sold short one round lot (that is, 100 shares) of snow’s stock at $21 per share. on march 1, a dividend of $3 per share was paid. on april 1, you covered the short sale by buying the stock at a price of $15 per share. you paid 50 cents per share in commissions for each transaction.

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umka2103 [35]

Answer: Definition the problem.

Explanation:

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2 years ago
Flyaway Travel Company reported net income for 2021 in the amount of $90,000. During 2021, Flyaway declared and paid $2,125 in c
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Answer:

$1.85

Explanation:

Fyaway travels reported a net income of $90,000 for the year 2021

During 2021 they declared and paid a cash dividend of $2,125

They also paid $10,000 as cash dividend in common stock

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Therefore the 2021 basic earning per share can be calculated as follows

$90,000-2,125

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Answer:

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GDP is calculated using three methods. They include the income, production, and expenditure approach.

In the Income approach, economists add up all the earnings from the factors of production. Wages and salaries of all employees; the profits from businesses and corporates' ; rents, and interests form landlords are summed up to get GDP. Adjustments are made to cater for the taxes paid to the relevant government agencies. ( 4th option)

The production approach involves getting the value of all the finished consumer goods and services in the economy. The approach excludes intermediary goods and work-n progress. GDP is obtained by adding the total of the finished products and services and multiplying them by their prices. (3rd option)

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