Question

A Requirements - X 1. For each of the preceding entries, indicate the effect of the error on cash, total assets, and net income. The answer for the first transaction has been provided as an example. Date Effect on Cash Effect on Total Assets Effect on Net Income May 1 Understated $ 300 Overstated $ 300 Overstated $ 300 2. What is the correct balance of cash if the balance of cash on the books before correcting the preceding transactions was $6,100? 3. What is the correct amount of total assets if the total assets on the books before correcting the preceding transactions was $23,000? 4. What is the correct net income for May if the reported income before correcting the preceding transactions was $12,000? Print Done

Answer 1

1)
Date	Effect on Cash		Effect on Total Assets	Effect on Net Income
1-May	Understated	$      300.00	Overstated	$                   300.00	Overstated	$                 300.00
2-May	Understated (12000 -1200)	$ 10,800.00	Understated	$              10,800.00	Understated	$            10,800.00
5-May	Correct		Understated	$                2,100.00	Understated	$              2,100.00
10-May	Correct		Correct		Correct
16-May	Correct		Correct		Overstated	$              5,900.00
25-May	Correct		Overstated	$                5,600.00	Correct
2)
Correct Cash Bal.	6100 + 300 + 10800	$ 17,200.00
3)
Correct Total Asset Bal.	23000 +10800 +2100-300-5600	$ 30,000.00
4)
Correct Net income	12000 - 300 + 10800 + 2100 - 5900	$ 18,700.00