Question

Sunland Corporation has used the accrual basis of accounting for several years. A review of the records, however, indicates that some expens and revenues have been handled on a cash basis because of errors made by an inexperienced bookkeeper. Income statements prepared by the bookkeeper reported $28,200 net income for 2019 and $34,100 net income for 2020. Further examination of the records reveals that the following items were handled improperly. 1. Rent was received from a tenant in December 2019. The amount $970, was recorded as revenue at that time even though the rental pertained to 2020 2. Salaries and wages payable on December 31 have been consistently omitted from the records of that date and have been entered as expenses when paid in the following year. The amounts of the accruals recorded in this manner were: December 31, 2018 $1,170 December 31, 2019 1,080 December 31, 2020 850 3. Invoices for supplies purchased have been charged to expense accounts when received. Inventories of supplies on hand at the end of each year have been ignored, and no entry has been made for them. December 31, 2018 $1,350 December 31, 2019 850 December 31, 2020 1.490 Prepare a schedule that will show the corrected net income for the years 2019 and 2020. All items listed should be labeled clearly. llgnore income tax considerations.) Enter negative amounts using either a negative sin preceding the number . 15.000 or parentheses . (15.000

Answer 1

ſ 2019 $ 28,200 2020 $ 34,100 I Net Income, as reported (9701 |_ 970 | Rent received in 2019, earned in L 2020 Salories & wages not accomed, 12/31/18 1170 || Sclorien & wapes nor ac rued, 12|31119 / (1,180) | 1,180 I salaries & wages not acemed, 12/31/20 (850) (1,350) Inventory of supplies, 12/31/18 Inwen tory of supplies, 1213119 I inventory of supplies, 12/31/20 850 - (850) 1,490 Corrected net income $ 26,720 $ 36,040