Alapaha Company\'s income from operations for the past three years is presented

Question

Alapaha Company's income from operations for the past three years is presented below. ALAPAHA COMPANY INCOME FROM OPERATIONS FOR YEARS 20X1 THROUGH 20X3 20x3 20x2 20X1 240,000 225,000 S 180,000 During the 20X3 year end audit, the attached items have come to your attention. REQUIRED: (1) Prepare the necessary entries, in proper general journal form, to correct the books for the transactions listed above. Assume that the books have not been closed for the current year. Present comparative income statement data for the years 20X1 to 20X3, in accordance with generally accepted accounting principles, starting with income from operations. Ignore all income tax effects. Assume that the beginning retained earnings balance (unadjusted) for 20X1 was $630,000. At what adjusted amount should this beginning retained earnings balance for 20XI be stated, assuming that comparative financial statements were prepared? Show appropriate calculations. Assume that the beginning retained earnings balance (unadjusted) for 20X3 is $900,000 and that noncomparative financial statements are prepared. At what adjusted amount should this beginning retained earnings balance be stated? Show appropriate calculations. (2) (3) (4)

Explanation / Answer

Answer 1:

Equipment (dr) 98000

Depreciation Expense (dr) 15000

Accumulated depreciation (cr) (3 years) 45000

Retained Earnings(cr) 68000

Answer 2:

Comparative Income Statement for the years ended

20X3

Answer 3:

Retained earnings (unadjusted)-$630000

Correction of 20X1 error ($98,000 – $15,000)-$83000

Retained earnings (adjusted)-$713000

Answer 4:

Retained earnings (unadjusted)-$900000

Correction of error ($98,000 – $45,000)-$53000

Retained earnings (adjusted)-$953000

Particulars

20X3

20X2 20X1 Revenue from Operations 240000 225000 180000 Other Income - - - Total Revenue 240000 225000 180000 Expenses: Depreciation 15000 15000 15000 Total Expenses 15000 15000 15000 Profit 225000 210000 165000

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