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You are conducting the audit of Hall Corporation for 2014 before its books have been closed

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Question;You are conducting the audit of Hall Corporation for 2014 before its books have been closed. For each of the errors that follow, indicate the effects of 2013 and 2014 income by placing the amount in the proper columns found on the next page. If income is understated because of the error, write U and the amount of understatement. If income is overstated because of the error, write O and the amount of overstatement. If income is not affected, write N (no effect). In the last column, prepare the journal entry or entries, if any are needed to correct the books or to record the accounting change.Errors:1. Failed to record depreciation expense of $3,000 in 2013.2. Failed to record merchandise purchased on account totaling $1,000 nearthe end of 2013. The merchandise was properly included in the ending inventory at the end of 2013.3. A machine costing $2,000 (useful life of 10 years with nosalvagevalue)was expensed when purchased at the end of4. Hall failed to record interest accrued on notes payable at the end of 2013. The interest totaled $1,400 and was paid early in 2014.5. In 2014, common stock with a par value of $300 was issued for $500. The difference of $200 was included in revenue.6. Inventory at the end of 2013 was understated by $1,200 because of an error in the physical count.Give the effect on net income for year 2014 for all 6 errors.

 

Paper#37845 | Written in 18-Jul-2015

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