(Solution) An examination of the accounting records of Katok Inc. for the year ended December 31, 2007 indicates that several errors were made. The following... > Snapessays.com


(Solution) An examination of the accounting records of Katok Inc. for the year ended December 31, 2007 indicates that several errors were made. The following...


An examination of the accounting records of Katok Inc. for the year ended December 31, 2007 indicates that several errors were made. The following errors were discovered: The footings and extensions showed that the inventory on December 31, 2006 was overstated by 380,000. 300,000 worth of inventories were received on January 2, 2008. Upon investigation you discovered that these goods were shipped by the supplier on December 30, 2007 FOB Shipping point. Further investigation revealed that liability on item were recorded when the goods were shipped. Salary accruals on December 31 were consistently omitted: 2004                190,0002005                220,0002006                200,0002007                280,000 Unused supplies were consistently omitted at the end of each year 2004                150,0002005                200,0002006                230,0002007                240,000 A 4-year fire insurance amounting to 300,000 was paid and fully expense on June 15, 2005. The insurance covers the fiscal year July 1 to June 30. Interest receivable were not recorded on December 31 of the following years: 2005                40,0002006                50,0002007                60,000 On January 1, 2007 equipment costing 800,000 was sold for 440,000. At the end of the sale the equipment had accumulated depreciation of 480,000. The cash received was recorded by the company as miscellaneous income. You also discovered that on July 1, 2005, the company completed the construction of the left wing of its factory building incurring a total cost of 1,400,000, which it had charged to repairs expense. The said building has been in operations for 5 years as of July 1, 6,000,000 had a carrying value of 2,250,000 as of December 31, 2007. The income statements of Ben Inc. indicate the following net income: 2005              3,000,0002006              3,500,0002007              4,000,000 What is the correct net income in 2005?

 


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This question was answered on: Sep 21, 2023

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